Rolls-Royce Holdings PLC (LSE:RR.)’s share price has risen once again after Citi became the latest broker to sing the praises of the FTSE 100-listed engineering group.
The broker has increased its price target to 431p from 294p in further reflection after the recent Capital Markets Day.
Citi has also lifted its EPS forecasts by 27% in the near term and 52% in the long term driven by very strong cash generation – it forecasts free cash flow up 85-96% in 2024/5, and 68% longer term.
“In the near term, we believe cash flow will be helped by working capital unwind, but expect the medium term FCF of well over 30p per share (31p in 2025 rising to 38p in 2028) will be sustainable and should be valued accordingly,” Citi said.
The broker said modelling of the net long-term service agreement customer advances creditors shows continued growth in the £0.8-1.2 billion per year range, driven by fleet growth, but also taking into account of increasing engine overhauls.
The increase by Citi is the latest bullish commentary on Rolls-Royce.
On Friday, analysts at UBS and Deutsche Bank increased their share price target to 400p, following an upgrade by arch-bear JPMorgan earlier in the week
It is the latest bullish commentary from the City community since new chief executive Tufan Erginbilgic joined the firm at the start of the year and pledged to restore the ailing group's fortunes.
Shares in the company have nearly trebled in the year to date, rising 199%, adding a further 2.4% to 295.50p today.