Update shared on 02 Dec 2025
Fair value Increased 0.38%The analyst price target for Rolls-Royce Holdings has been revised upward from £11.93 to approximately £11.98. This change reflects analysts' increased confidence in the company's turnaround progress and opportunities for growth in the aerospace sector.
Analyst Commentary
Recent street research has provided nuanced perspectives on Rolls-Royce Holdings, highlighting both positive outlooks and cautionary points regarding the company’s future performance and valuation in the aerospace sector.
Bullish Takeaways- Bullish analysts note that Rolls-Royce has demonstrated significant operational improvements in recent years. This supports higher price targets and a more optimistic valuation outlook.
- The successful development and future prospects of the next-generation Ultrafan engine are seen as providing material upside and serving as an important growth catalyst.
- Improved stability and increasing demand in the European aerospace market strengthen the expectation for robust aftermarket activity and near-term capital returns for the company.
- Recent initiations at favorable ratings reflect increased investor confidence in the sustainability of the company’s turnaround and its ability to capitalize on market opportunities.
- Bearish analysts remain watchful of the long lead times associated with major aerospace development projects, such as those related to next-generation aircraft. These long lead times could delay significant engine-related revenue streams.
- Concerns persist around Rolls-Royce’s ability to consistently achieve higher profitability, given the lingering volatility of global supply chains and continued pressure on execution in large-scale aerospace programs.
- Some caution that while near-term prospects appear strong, long-term growth could be tempered by the slow pace of new platform launches and competitive dynamics within the engine manufacturer segment.
What's in the News
- Boeing is in early-stage development of a successor to the 737 MAX and has held discussions with Rolls-Royce regarding new engine options. This signals potential long-term opportunities for Rolls-Royce as an engine supplier (The Wall Street Journal).
- Rolls-Royce, together with Xanadu and Riverlane, announced the successful completion of a quantum computing project that dramatically reduced simulation runtimes for jet engine airflow modeling. This advancement accelerates prototyping and unlocks new design possibilities (Key Developments).
Valuation Changes
- Consensus Analyst Price Target has risen slightly, moving from £11.93 to approximately £11.98.
- Discount Rate has increased from 7.79% to 8.02%.
- Revenue Growth projection has edged down marginally from 7.22% to 7.21%.
- Net Profit Margin estimate has decreased from 14.35% to 14.07%.
- Future P/E (price-to-earnings) ratio has increased from 36.73x to 37.89x.
Disclaimer
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