Rolls-Royce trading statement – can the share price keep rallying after the November surge?

Rolls-Royce shares have surged over the past six weeks, but can they maintain that optimism in the face of a continued tough outlook?

When is Rolls-Royce’s trading statement?

Rolls-Royce is expected to publish a trading statement covering the most recent quarter on 11 December.

Rolls-Royce statement – what to look for

Rolls-Royce has a long road of recovery ahead of it, as the world slowly goes back to normality now that Covid-19 vaccines are being deployed. But while the global economy might bounce back quickly, air travel may not. Consumers have seen their incomes hit and companies are looking to save money, which means less flying all round, fewer new engine orders and, with many planes grounded, much less need for maintenance.

Cash outflows will continue for the time being, and while it is raising funds and selling off assets to repair the balance sheet, it will have to keep borrowing at higher yields now to provide the cash for operations as things slowly recover.

How to trade Rolls-Royce earnings

The average move on results day for Rolls-Royce is 7.14%, with the current move forecast to be 4.4%. Of 19 brokers covering the stock, four have ‘buy’ recommendations, with eight ‘holds’ and seven ‘sells’.

Rolls-Royce shares – technical analysis

Dip buyers did very well if they bought the November lows around 67p after the gap down at the end of October, seeing a rally to 130p in the space of just a month. But the downtrend is still firmly in place, and the price is currently struggling to clear the 50-day simple moving average (SMA) of 135p.

A turn down from here would be a compelling lower high, while further gains first target the 100-day SMA at 179p and then on to the October peak at 240p.

Long haul to recovery

Even after its surge from the lows of October, the shares still look cheap, but with growth uncertain for the time being there appear to be better opportunities to play the ‘reopening global economy’ theme.

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