Rolls-Royce Holdings PLC (LSE:RR.) is one of the best equity picks in Europe currently, according to analysts at Bank of America, with the capital markets day (CMD) later this month to confirm its improving fortunes.
Key will be engine flying hours, (EFH), which BofA estimates will hit 88.6% of pre-Covid levels compared to consensus forecasts of 86.5%.
A strategic review at the CMD will also provide divisional targets mid-term, suggesting "significant upside" in Power Systems and to a lesser extent Defence margins.
None of this has been factored into consensus numbers, believes BofA, which will prompt upgrades through the fourth quarter.
Finally, BofA believes Rolls’ balance sheet concerns "are over" with an investment grade rating being achieved in 2024, sparking a return of dividends.
'Buy' with a 264p target is BofA’s conclusion.