Among the famous UK stocks, FTSE 100-listed Rolls-Royce Holdings PLC (GB: RR) released its trading update last week, following which Goldman Sachs reaffirmed its Bullish stance. The company upheld its guidance for the full year 2024, following a favourable beginning to the year.
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Consequently, analyst Victor Allard from Goldman Sachs confirmed his Buy rating, projecting an upside of 17.15%. Allard remains optimistic about the stock’s outlook, citing the company’s positive trajectory highlighted in the upbeat trading update.
In 2024, Roll Royce stock has continued to trend higher, boasting a year-to-date increase of 51%.
Rolls-Royce specializes in designing engines and power systems for the aerospace and defense sectors. The company has an extensive presence in the U.S., Asia, Europe, the Middle East, and Africa.
Goldman Sachs’ Bullish Outlook on Rolls-Royce
Goldman’s bullish stance is mainly driven by Rolls-Royce’s balanced performance in operating profits and free cash flow so far in 2024, which aligns closely with its full year’s guidance.
Moreover, engine flying hours (EFH), a crucial metric for RR, rebounded to 2019 levels, consistent with both the company’s and Goldman’s projections. The company expects its EFH to be between 100% and 110% of the levels recorded in 2019 for the full year 2024.
According to the company’s update, it witnessed a robust recovery in its Civil Aerospace operations, fueled by the ongoing revival of international travel in Asia and the expansion of its aircraft fleet. The company’s other segments, like Data Center and Defence, also underscore its advantageous position.
Finally, Allard highlighted the company’s strong balance sheet, as it cleared off a huge pile of gross debt and removed its underdrawn loan facility, potentially paving the way for the resumption of dividends in the near term.
Is Rolls-Royce a Good Stock to Buy?
Following the update, analysts from Deutsche Numis, Morgan Stanley, UBS, and Jefferies also confirmed their Buy ratings on the stock.
According to TipRanks, RR stock has received a Strong Buy rating based on eight unanimous Buy recommendations. The Rolls-Royce share price forecast is 517.40p, which is 16% higher than the current trading level.
