The share price of Rolls Royce Holdings (GB:RR) is showing signs of strength as it surpasses its previous highs. The latest analysis indicates that the stock could be preparing for a significant upward movement in the near future.
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Over the past year, the stock has experienced a significant increase of over 90%, with a notable surge of nearly 70% in the last six months.
Rolls-Royce is an engineering company that specializes in manufacturing engines and power systems for the aerospace and defense sectors. Headquartered in London, the company’s operations are spread across the U.S., Asia, Europe, the Middle East, and Africa.
The Bullish Case
After being an underperformer in its industry for a long time, the company started the year 2023 on a solid note. The shares have been trading up by 59% YTD, defense spending is increasing, and the new CEO is taking control of things.
In order to sustain progress, the company’s CEO, Tufan Erginbilgic, plans to reduce expenditures on non-core projects and renegotiate current sales and maintenance contracts. The company will also prioritize debt reduction and improved cash generation.
Analysts’ Opinion
Analysts are moderately bullish on the company’s stock with full confidence in the new leadership, which can turn things around for the better.
Nine days ago, Chloe Lemaire from Jefferies reiterated her Buy rating on the stock, predicting an upside of 36.7% growth in the share price. Lemaire stated increasing flying hours and cost-saving measures as significant factors contributing to the improved cash flow.
12 days ago, UBS analyst Ian Douglas confirmed his Buy rating at a price target of 200p, which is 34% higher than the current trading levels.
Rolls-Royce Stock Forecast
According to TipRanks, RR stock has a Moderate Buy rating based on six Buy, one Hold, and one Sell recommendations.
The average target price of 184.31p indicates a potential upside of 23.6% based on the current trading level.
Ending Notes
Currently, Rolls-Royce’s share price is surging as the previously challenging factors are transforming into favorable conditions. Amidst a cost reduction program and a new chief executive, there are optimistic expectations for a more promising year ahead in 2023.
