Key points:
- Rolls-Royce will report a trading update this week
- RR. shares are down 38% this year
- The majority of analysts have a Hold rating on the stock
Rolls Royce (LON: RR.) will report a trading update on Thursday, November 3.
The company's shares struggled since the pandemic and have, so far, yet to recover, down over 38% in 2022, although they have gained over 13% in the last month. Monday was another positive day for shareholders, with the stock closing 1.5% higher.
However, it is still some distance from its pre-pandemic level of around 223p in February 2019.
Also Read: How To Buy Rolls Royce Shares
In its 2022 half-year results, released in August, Rolls-Royce said demand for its products and services is growing after it experienced a record order intake in power systems, a continued recovery in civil aerospace engine flying hours, and high visibility of future revenues in defense with a strong order book.
When it comes to flying hours, several airlines have recently reported strong demand, which is another positive sign for Rolls-Royce's civil aerospace business, and the company is expected to reveal it has continued its gradual signs of recovery when it updates the market on Thursday.
Rolls-Royce also maintained its full-year guidance in the release, saying it expects low-to-mid-single digit underlying revenue growth, full-year underlying operating profit margin broadly unchanged on the prior year and modestly positive free cash flow in 2022. In addition, while underlying profit margins were lower in the first half, Rolls-Royce said they are expected to improve in the second half.
Analyst Ratings
In August, JPMorgan cut the price target on Rolls-Royce to 60p from 70p, keeping an Underweight rating on the shares, while Societe Generale raised its price target on the stock to 92p from 90p per share, maintaining a Hold rating. Morgan Stanley, who kept an Overweight rating on Rolls-Royce, lowered their price target on Rolls-Royce to 110p from 118p.
According to TipRanks, out of nine analysts, two have Buy ratings on the stock, six have Hold ratings, and one has a Sell rating, with the average price target at 96.6p, representing a potential 23.5% upside from current levels.