Roll-Royce’s new chief executive Tufan Erginbilgic could help the aerospace firm’s consistency, but uncertainties remain, reckon UBS analysts.
UBS gave Rolls-Royce a ‘neutral’ rating, saying that despite its maintenance contracts for its engines being “more attractive” than others in the wider industry, its inconsistency in communicating with investors breeds uncertainty.
UBS also suggested it was too early to comment on Erginbilgic’s January 1 appointment as Rolls-Royce chief executive, with his impact yet to be seen.
“If consensus estimates are achieved, then the stock looks cheap to us,” said the bank, with revenues predicted to hit £11.8bn for the full year, up 8% on 2022’s £10.9bn.
It added that Rolls-Royce-powered flights are unlikely to return to pre-pandemic levels before 2025 in conjunction with the whole aviation industthe ry, meaning income it generates when its engines fly will continue to be hit.
UBS raised Rolls-Royce’s share price target from 102p to 105p, with the stock sitting at 106p on Tuesday, having fallen 2.5% during the day.
Last week, Erginbilgic gave a brutal assessment of his company, likening it to a “burning platform”.
Suggesting a major reshuffle was due, he said Rolls-Royce’s performance had become “unsustainable,” ahead of the first set of full-year results due under his leadership on 23 February.