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Rolls-Royce (RR.) Share Price Is Up 23.5% in One Month but Has Slowed Down. What’s Next?

Simon Mugo trader
Updated 8 Oct 2021

Rolls-Royce (LON: RR.) share price is up 23.5% over the past month but has since slowed down, as evidenced by the 4.28% decline recorded in the past week. What’s next for the company and its share price?

To chart a way forward for Rolls Royce, we must look at its price chart and the fundamental drivers behind its latest rally. One of the reasons for the recent rally was the disposal of its Spanish business for €1.7bn to a private equity consortium led by Bain Capital.

Investors cheered the move because it brought the plane engine manufacturer close to its goal of disposing of assets worth £2 billion to boost its balance sheet, which had negative shareholder equity, indicating that its liabilities were greater than its assets.

Another significant driver behind the latest rally phase was the company’s recent award of an engine supply contract with the US military.

Rolls Royce North America won a contract from the US Air Force to supply its F-130 plane engines for the B-52 Stratofortress military plane for the next 30 years.

The contract was estimated to be worth up to $2.6 billion by Reuters, which could become a significant contributor to the plane maker’s long-term profitability.

The F-130 engine is expected to have greater fuel efficiency than other plane engines, increased range, and fewer maintenance intervals. Rolls Royce said that the engine could stay on the plane for its entire lifetime, once mounted.

With many wondering whether Rolls Royce shares have further upside, the short answer is yes, the plane engine maker’s share price traded as high as 444p in 2014, with its latest crucial high being the 378p level hit in July 2018.

However, we will likely see the shares continue trading sideways for a while or fall briefly to ease the overbought conditions before the next rally begins. Investors interested in opening new positions can get in at the support levels highlighted below.

*This is not investment advice. Always do your due diligence before making investment decisions.

Rolls Royce share price.

IG chart of Rolls Royce share price

Rolls Royce shares are up 23.54% over the past months and have recently topped off. What’s next for the company?

Should you invest in Rolls Royce shares?

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Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading