Update shared on 18 Nov 2025
Fair value Increased 0.025%Analysts have raised their fair value estimate for Rolls-Royce Holdings slightly to £11.93 per share. They cite improved long-term profit margins and ongoing operational turnaround as key factors supporting the higher price target.
Analyst Commentary
Recent analyst notes present a mixed but predominantly positive outlook for Rolls-Royce Holdings, balancing optimism around its transformation and future growth drivers with consideration of remaining uncertainties.
Bullish Takeaways- Bullish analysts highlight that Rolls-Royce has successfully executed a multi-year operational turnaround. This has led to stronger financial results and improved long-term profit margins.
- Price targets for the stock have been raised in light of the company’s enhanced market position. Several bullish analysts cite upside potential from the forthcoming Ultrafan engine generation.
- There is optimism about accelerating capital returns in the near term as demand in the European aerospace market continues to outstrip supply, and the aftermarket remains robust.
- Bullish analysts believe recent momentum positions the company well to benefit from industry recovery and evolving aircraft technology needs.
- Bearish analysts point out that while some engine technology opportunities appear promising, their timeline for commercial realization is likely to be extended. Major new programs are not expected before the mid-2030s.
- There are concerns that, despite operational gains, lingering volatility in the broader aerospace market could impact growth for Rolls-Royce in the medium term.
- Some analysts caution that sustained productivity improvements and rate increases are crucial for continued financial recovery and balance sheet restoration.
- Bearish analysts note that expectations for industry-wide free cash flow generation will need to be met before major investments in next-generation products translate into revenue.
What's in the News
- Boeing has begun early-stage development of a successor to the 737 MAX. The company has reportedly met with Rolls-Royce officials to discuss new engine options for the future aircraft (Wall Street Journal).
- Rolls-Royce has held talks with investment banks regarding funding options for its small nuclear reactor business. These discussions include the potential for an initial public offering (Financial Times).
- The company is exploring financing for its small nuclear business after being selected by the UK government to build the nation's first fleet of small modular reactors (Financial Times).
Valuation Changes
- Fair Value Estimate has increased slightly from £11.93 per share to £11.93, reflecting analysts' positive outlook.
- Discount Rate has fallen moderately from 7.92 percent to 7.79 percent. This indicates a lower risk premium in current forecasts.
- Revenue Growth estimate has decreased marginally from 7.33 percent to 7.22 percent, signaling slightly more conservative expectations.
- Net Profit Margin has risen from 13.26 percent to 14.35 percent. This points to improved profitability forecasts.
- Future P/E Ratio has declined from 39.8x to 36.7x. This suggests analysts expect stronger future earnings relative to price.
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.