Rolls-Royce gains on upgraded forecasts and price targets

Shares of jet engine manufacturer Rolls-Royce Holdings (LSE: RR) led gainers on the FTSE 100 Monday, rising 2.4% intraday after Citi upgraded its price target on the stock to 431p from 294p.

The bank lifted earnings and cash flow forecasts following the company’s recent capital markets day. The upgrade follows similar moves by Deutsche Bank last week (lifted target to 400p from 310p) and JP Morgan earlier this month (upgraded to ‘overweight’ from ‘neutral’, 400p target).

Rolls-Royce is targeting 2027 operating profit between £2.5 billion and £2.8 billion, operating margins of 13-15%, free cash flow of £2.8-£3.1 billion, and return on capital of 16-18%.

The Rolls-Royce share price ended Monday flat at 291p, failing to hold early gains. However, shares are still the top-performing stock in the FTSE 100 year-to-date, having gained nearly 195% in 2023 so far.