Why did Rolls-royce shares jump up 11.5%?

Rolls-Royce shares shot up sharply at the start of the week after it secured a new 30-year contract with the US Air Force.

  • Rolls-Royce (LON: RR) share price rallied over 11% earlier this week
  • Its North America arm has been selected to power the US Air Force’s B-52 Stratofortress for the next 30 years
  • The aviation engineer’s stock is up 25% in the last one month alone
  • Keen to bet on Rolls-Royce’s rising share price? Open an account with us today to go long on the stock.

Rolls-Royce stock price: what’s the latest?

Rolls-Royce shares spiked up as much as 11.5% this week, after it announced that Rolls-Royce North America has inked up a new deal with the US Air Force.

The aircraft engineer said on Monday that its North American unit has been selected to provide the power plant for the B-52 Stratofortress under the Commercial Engine Replacement Program (CERP).

The tie-up means the American-made Rolls-Royce F-130 engine will power the B-52 for the next 30 years. The Air Force made the announcement after a vigorous multi-year competition.

The F130 and its commercial family of engines have accumulated more than 27 million engine flight hours. A variant of the Rolls-Royce engine selected to power the iconic B-52 is already currently in service with the USAF around the world, powering both the C-37 and E-11 BACN aircraft.

The B-52 CERP win creates demand for 650 engines to be produced at the site and will bring 150 new high-tech, high-skilled jobs for the state of Indiana.

What are analysts’ latest ratings?

The stock is up 25% in the last 30 days, and up 38.6% year to date.

RR has a consensus rating of ‘hold’ and price target of 119p, based on the latest analyst data published by MarketBeat.

The latest price case came from JPMorgan analysts a month ago. They raised their price target on RR to 130p from 105p, on the back of higher earnings forecasts over the next three years.

The firm also predicted that a reported sale of the group’s Spanish unit ITP Aero to consortium-led investment house Bain Capital for a rumoured €1.6 billion (£1.5 billion) could boost free cash flow to around £750 million by 2023.

Finally, the analysts noted that Rolls-Royce’s first half underlying profits for 2021 beat consensus estimates by £536 million, which indicated that its cost-cutting programme is starting to pay off.

Elsewhere, Deutsche Bank analysts also boosted their price target to 116p from 113p, but kept a ‘hold’ rating, while Societe Generale raised its fair value estimate to 100p from 95p alongside a ‘sell’ call.

Take advantage of Rolls-Royce’s soaring share price today

Trade Rolls-Royce and over 16,000 international shares with our award-winning platform.* Learn more about trading shares with us, or open an account to get started today.

* Based on the Investment Trends 2018 Singapore CFD & FX Report based on a survey of over 4,500 traders and investors. Awarded the Best Online Trading Platform by Influential Brands in 2020. Awarded the best retail FX provider for Asia by FX Markets in 2020

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.