Rolls-Royce Shares Pull Back From Fresh Highs – Will 1300p Offer Resistance?

Rolls-Royce shares (LON:RR) have bumped into some resistance today, initially breaking new ground to reach 1306.60p before retreating into the afternoon session. This movement raises questions about the sustainability of the stock's recent rally and whether the 1300p level will act as a significant resistance point, or merely a steppin stone to bigger things.

The RR share price, after hitting the new high, pared gains to trade around 1,280p, representing a 1.92% decline from its peak. Despite this pullback, Rolls-Royce remains a huge outperformer, adding 14.87% over the past month and a remarkable 125% over the past year. This surge has propelled the company's market capitalization to £107 billion.

The aerospace giant's impressive performance is underpinned by a series of positive developments. Upgraded financial forecasts have fueled investor optimism. In February 2025, the company reported a 16% year-on-year revenue increase to £17.8 billion and an operating profit of £2.5 billion, exceeding expectations. This prompted Rolls-Royce to raise its 2025 operating profit guidance to between £2.7 billion and £2.9 billion, with free cash flow projected in the same range. The company now anticipates achieving its 2027 targets ahead of schedule.

In a move signaling confidence in its financial strength, Rolls-Royce reinstated a dividend of 6 pence per share after a five-year hiatus. Furthermore, the company announced a £1 billion share buyback program for 2025, further incentivizing shareholders.

Operationally, Rolls-Royce has demonstrated robust performance across its divisions. The Civil Aerospace division is experiencing strong demand, with significant engine orders from airlines like IndiGo and Malaysia Airlines. Large engine flying hours increased by 8% year-on-year, reaching 109% of 2019 levels. The Defence sector is also contributing to growth, with Rolls-Royce securing a contract to supply EJ200 engines for 20 Eurofighter Typhoon aircraft to Türkiye.

Technological advancements have further bolstered the company's outlook. A recent collaboration with Xanadu and Riverlane resulted in a quantum computing breakthrough that significantly accelerates jet-engine airflow simulations, reducing runtimes from weeks to under an hour in some cases. Additionally, Rolls-Royce has begun MV-75 engine tests in Indiana, demonstrating continued innovation and development in its core businesses.

Bull Case

The recent price action suggests that the 1300p level may present a psychological barrier for the stock, at least in the near term. Markets are likely evaluating whether the rapid gains are sustainable or if a period of consolidation is on the horizon.

Whether the 1300p level will hold as resistance remains to be seen, but the robust fundamentals and positive outlook suggest that Rolls-Royce is well-positioned for continued growth, contingent upon sustained operational execution and overall market conditions. This pullback could be a temporary breather before the next leg up, or a sign that the markets are taking a more cautious approach given the rapid appreciation in share price.