Rolls-Royce Holdings PLC (LSE:RR.) has a “clear route to better cash flow”, according to Citi, the American investment bank, which has raised its price target to 255p.
A release of working capital could add a further 65p to the mid-term valuation, investors were told in a research note.
Citi said it has taken a deep dive into the finances to assess the potential impact of new chief executive Tufan Erginbilgic’s “as yet unquantified turnaround plan”.
Its number crunchers believe the blueprint will lead to better cash flow for the company. They also think that the company's civil aerospace business will recover, which will boost investor confidence.
In early trade, the share price was up 2.2% at 148.25p, well below Citi’s target, but marginally ahead of the consensus of 140p.