Rolls-Royce Holdings PLC (LSE:RR.)’s first-half results are expected to be in line with full-year guidance, according to US bank Jefferies, with cost inflation and supply chain constraints less impactful for the company.
The bank maintained its hold rating with the target price set at 100p.
Analysts at Jefferies noted that a £324mln cash outflow would be helped by the lack of 787 deliveries, but weighed down by an inventory build-up in power systems ahead of its first-half results.
Specifically, the broker mentioned that the FTSE 100 company should remain “broadly shielded” from current supply chain constraints impacting the rest of the aerospace and defence sector due to growth at Rolls-Royce being targeted online at its power systems business.
Additionally, it is contractually well protected with regard to cost inflation and should be able to pass through all its rising costs to customers in the civil sector.
There should be an update on the disposal of ITP, a joint venture between a Spanish engineering conglomerate and Rolls Royce.
Despite missing the initial deadline for the close of the sale, any update will be a catalyst for the shares and represent the first steps toward balance sheet recovery, according to Jefferies.