Rolls-Royce shares jump 6% as analysts lift expectations for 2023
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Rolls-Royce shares rise 6% as analysts raise 2023 expectations under new boss Tufan Erginbilgic
- Rolls will benefit from credit upgrades and aviation sector recovery
- The pandemic was the culmination of several turbulent years for Rolls-Royce
- CEO Tufan Erginbilgic will lay out plans for a group overhaul in February
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Rolls-Royce shares rose sharply on Tuesday after analysts at Jefferies upgraded the stock to a buy rating, with a price target of 125 pence.
Rolls will be under new leadership in 2023, with Tufan Erginbilgic succeeding Warren East as CEO, and Jefferies believes this year will herald positive change for the long-beleaguered company.
Jefferies said the group is likely to benefit from potential credit upgrades, the continued recovery of the airline industry and the reopening of China’s economy.
Launch for Rolls-Royce stock as Jefferies raises stock from ‘hold’ to ‘buy’
Lifting Rolls’ rating from “hold” and target price of 90 pence, Jefferies told investors it expects the group to post improved earnings and free cash flow in 2023.
Rolls-Royce Shares jumped 5.7 percent on Tuesday afternoon, leading FTSE 100 gains to 98.83 pawns.
It’s been a tumultuous period for the most prestigious name in British engineering, with East’s tenure defined by profit warnings, a £2.4bn bill to compensate airlines for faulty engines, a £671m bribery scandal settlement and the fallout from covid.
The pandemic dealt a huge blow to Rolls’ main source of income: building and servicing aircraft engines.
It lost around £6bn in cash during the crisis and was forced to sell £2bn worth of businesses and raise money from shareholders and creditors.
Next month, Erginbilgic is expected to draw up plans for a review of the group – its fourth since 2014.
While the company will break even this year, it is still a long way from making bumper profits.
Rolls shares fell about 24 percent in 2022 and are down about 67 percent over the past five years.
Jefferies’ improved forecast will be welcomed by many UK DIY traders, with Rolls as Interactive Investor’s second most bought stock in 2022.