Rolls-Royce Holdings PLC (LSE:RR.) dipped over 4% on Thursday after the engine maker’s move to double down on guidance underwhelmed given a backdrop of heightened expectations.
Shares fell 4.4% to 548p on the back of the third quarter update, where Rolls said it was on course for operating profit of £2.1-£2.3 billion and free cash flow of £2.1-2.2 billion this year.
Engine flying times, on which Rolls is paid, had sat at 102% of 2019 levels over the year to October, the company added
Shore Capital analysts highlighted this was at the low end of guidance for 100-110% of pre-pandemic levels, placing Rolls at risk of missing its flight time estimates.
“We may need to moderate our forecasts slightly as we assume 105% of 2019 levels are achieved in 2024,” the number crunchers said.
Rolls had also said supply chain issues continued in the aerospace sector, Shore Cap pointed out, noting the company warned of a £150-200 million hit in August.
Shares in the manufacturer have climbed over 85% so far this year, having surged since chief executive Tufan Erginbilgic took the helm in early 2023.
This “excellent run the stock has had over the last couple of years” left the door open for Rolls to face a negative reaction, analysts said.
“Whilst we expect to moderate our numbers ahead of full-year results, we do not believe a material change will be required, but will revert in due course.”