Rolls-Royce Shares Start Year Steady, Analyst Raise Points To Further Upside Ahead

Rolls-Royce Holdings shares (LON:RR.) have started 2026 on a stable footing, edging up 0.58% through January to close the month at 1,204p, despite pulling back from a mid-month peak of 1,306.60p. The aerospace and defense giant's stock now trades at double the level seen twelve months prior, capping a remarkable rally that has caught the attention of markets and analysts alike.

With momentum sustained into the new year, at least one major investment bank believes the upward trajectory has further to run.

Jefferies upgraded its price target on Rolls-Royce to 1,550p from 1,290p, maintaining a Buy rating on the shares. The revised target implies potential upside of nearly 29% from current levels, reflecting growing confidence in the company's transformation into a leaner, more cash-generative operation.

The move follows a string of positive analyst revisions over the past year, as Rolls-Royce continues to exceed market expectations on both operational and financial fronts.

The shares' steady start to 2026 comes against a backdrop of sustained execution across the business, and brings the 5 year return to a mighty 1,212.98%.

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Rolls-Royce has benefited from a recovery in civil aerospace demand, particularly in long-haul widebody flying hours, which drives aftermarket revenue from its engine servicing contracts.

The defense division has also contributed, supported by elevated geopolitical tensions and increased government spending on military capabilities.

Markets appear to be digesting the recent gains, with the January pullback from 1,306.60p suggesting some profit-taking after a doubling in value, and a calming of some geopolitical uncertainty. However, with analyst price targets still pointing to meaningful upside and the company's financial trajectory firmly positive, sentiment remains constructive.

Whether Rolls-Royce can sustain its momentum will depend on continued operational delivery and the broader health of the sector, but the fundamentals, and the latest view from Jefferies suggest the turnaround story still has room to run.