Rolls-Royce share price started the year well, rising by over 4% on Friday and moving to a record high of 1,197p. It has now soared by 17.45% from its lowest level in November last year and by 115% from its April lows. This article provides a forecast for the stock this year and what to expect.
Rolls-Royce share price surges amid strong fundamentals
The RR stock price has jumped as its fundamentals improve across the board. Its defence business is set to benefit from the new geopolitical events after Donald Trump’s capture of Venezuela’s Nicolas Maduro during the weekend.
The attack could lead to more defense spending as investors anticipate more geopolitical issues in Europe, North America, and the Asian region. For example, China could be emboldened to invade Taiwan, while Russia may consider more regional attacks. There is also fear that Trump may attack Greenland and Cuba soon.
Rolls-Royce Holdings is one of the biggest players in the defense industry in Europe, where it makes propulsion systems, aircraft engines, submarines, and other land equipment.
The company will also benefit from the ongoing demand for power equipment amid the artificial intelligence (AI) boom in the United States and other countries. Indeed, the company is now building power solutions that will come online, possibly in 2027 or 2028. The products will help companies in the data center industry ensure continuity in case of power outages.
Most importantly, Rolls-Royce’s civil aviation industry is doing well as demand for its engines and flying hours jumps. Companies like Airbus and Boeing are expected to deliver more jets this year, which will benefit the company since it is a major engine supplier.
Meanwhile, Rolls-Royce has become a big player in the Small Modular Reactor (SMR) industry, which is expected to keep growing as countries and companies invest in nuclear power. Some American SMR companies with little experience in the nuclear industry, like NuScale and Oklo have already received a multi-high valuation as their R&D continues.
Analysts are bullish on Rolls-Royce
Some analysts tracking the company are bullish on it and are expecting it to keep rising, helped by its strong fundamentals. JPMorgan analysts believe that the stock has more upside to 1,245p, up by 17% from the current level.
Analysts note that Rolls-Royce has become a momentum company with a combination of strong fundamentals, including strong revenue growth and profit margin expansion.
The most recent results showed that the company’s business is on track to hit the management’s targets, and odds are that it will surpass them.
In a statement, the CEO, Tufan Erginbilgic, said that the company will make between £3.1 billion and £3.2 billion in operating profit and between £3.0 billion and £3.1 billion in free cash flow. These numbers will be much better than what it made in 2024, when its revenue rose to £17.8 billion, and its operating profit moved to £2.4 billion.
Rolls-Royce stock price technical analysis
The daily timeframe chart shows that the Rolls-Royce stock price has rebounded in the past few weeks, moving from a low of 1,019p on November 25 to the current 1,197p.
It has jumped above the key resistance level at 1,192p, the highest point on September 29, and the neckline of the inverted head-and-shoulders pattern.
The stock remains slightly above the 50-day and 100-day Exponential Moving Averages (EMA), while the Relative Strength Index (RSI) and the MACD indicators have continued rising.
It also remains above the Supertrend indicator, a sign that bulls remain in control for now. Therefore, the stock will likely continue rising as bulls target the next important resistance level at 1,200p.
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