Rolls-Royce Holdings PLC (LSE:RR.) heads into its half-year results this week with plenty to prove.
After an extraordinary rally in its shares, up more than ninefold since late 2021, the bar for further gains keeps rising.
Panmure Liberum, which maintains a 'buy' rating, says that any further upside now relies on Rolls delivering fresh upgrades to forecasts.
According to Panmure, market forecasts for the first half of 2025 may actually be on the cautious side, with consensus numbers showing lower profits than a year ago.
The broker finds this odd, given the company’s upbeat trading statement in May, which flagged a strong start to the year.
Its own projections suggest half-year sales and operating profit will account for a similar share of the full-year total as they did in 2024, passing the reasonableness test.
Management has made a habit of talking up the pace of recovery, saying in February that profit and cash flow targets for 2025 are now expected two years ahead of schedule.
Guidance for 2028 has also been lifted, and the company insists that these are “a milestone, not a destination”.
Panmure points out that technical improvements to Rolls' civil aero engines, designed to extend the time between overhauls, should help lower costs while preserving recurring service income.
However, after such a dramatic rerating, the aero-engine maker's valuation now sits above historic peaks for its sector peers.
That means the shares may only make further progress if forecasts keep rising.
With results due on Thursday (31 July), investors will be watching for evidence that Rolls can keep up the momentum that has driven one of the market’s most striking recoveries in recent years.