A stretch too far. This how the influential engineering team at Deutsche Bank describes Rolls Royce PLC’s (LON:RR.) ambition of generating £1bn of free cash flow by 2020.
The key challenge, Deutsche says, is lowering the burn by the civil aviation engine business, which is currently getting through around £500mln a year.
And this, it says, takes into consideration £2.3bn a year of high margin after-market work.
While Deutsche has increased its sum of the parts valuation of the stock from 475p to 540p it retains its ‘sell’ recommendation.
The current price target suggests the shares, currently changing hands for 750p, could tumble by 39%.
Of the eight analysts logged as following Rolls Royce, half have ‘sell’ recommendations and there is only one ‘buyer’. The remainder reckon Rolls is fully valued.