Rolls-Royce Holdings PLC (LSE:RR.)'s upcoming investor day at the end of this month is causing quite a stir among analysts, and could, at least temporarily, head off concerns raised by Emirates, one of its major airline customers, this month.
Rolls-Royce is going to host a capital markets day on 28 November, which will allow the British aeroplane engine manufacturer an opportunity to meet with stakeholders outside of the usual reporting period and update them on strategy.
Deutsche Bank analysts issued a bullish research note on the engineering group on Friday, raising the bank's ‘fair value’ share price estimates for the aerospace company by nearly half.
Analysts at the bank’s research arm have lifted their price target for Rolls-Royce, which supplies engines to some of the world’s biggest airlines, by 48% to 310 pence per share, up from a prior target of 210p each, confirming their ‘buy’ rating.
Deutsche Bank stock market analyst Christophe Menard suggested that the forthcoming capital markets day could herald the “next leg up” in Rolls-Royce's strategy.
“We expect the new management team to provide a strategy update and cost saving targets for the four divisions,” Menard said.
“It should also provide some medium-term financial targets.”
Analysts at the bank believe that Rolls-Royce's new targets will be bold, enough so for the capital markets day to be a “welcome revolution” for the company.
Bold new financial targets could just suffice to bat away concerns about alleged problems with Rolls-Royce's engines voiced by one of its major airline customers Emirates on Tuesday, at least temporarily.
Emirates boss Tim Clark claimed this week that the ‘high thrust’ Trent XWB-97 engine for the Airbus A350-1000 is “defective” and has refused to order any of the planes until the alleged problems with the engine are fixed.
Citigroup analysts suggested earlier this week that the move could be a “price” guarantee play by the boss of Emirates.
They highlighted that the criticised Trent XWB-97 engine is a higher thrust variant of the Trent XWB-84, and that variants of this kind invariably mean “higher temperatures and faster wear”, particularly in hot and sandy climates such as in Qatar.
Rolls-Royce's shares have escalated in price in the past year, rising by nearly 150% in market value throughout the year to date, and are currently trading at a price of 244.5 pence per share.
The aerospace group is a constituent of the FTSE 100 index and has a primary listing on the London Stock Exchange.