Rolls-Royce Holdings PLC (LSE:RR.) has had a buy rating and three-year price target of 665p reiterated by Panmure Liberum after the aero-engine maker left guidance unchanged in yesterday’s update.
“There is still plenty of upside to our 3-year target, which is based on the assumption that RR rerates to a typical Safran peak cycle rating this cycle, instead of the much lower ratings of previous cycles," said analysts.
During those, Rolls Royce continually struggled with cashflow and profitability as it built the market share which it is benefiting from now.
The broker added the share price is now well past its one-year target of 400p, but that is not surprising as the rerating process is not linear and, in this case, "it is the three-year target (665p) which matters".
Shares today were up 0.7% at 556.6p.