Rolls-Royce share price: Deutsche Bank lifts valuation on engine maker

Move follows group’s free cash flow update

Rolls-Royce share price: Deutsche Bank lifts valuation on engine maker

Deutsche Bank has lifted its valuation on Rolls-Royce Holdings (LON:RR), following what the reckon is a bullish outlook for the medium-term, Proactive Investors reports. The move comes after the British engine maker recently unveiled plans to slash 4,600 jobs and reported that it was well-placed to exceed its 2020 free cash flow target.

Rolls-Royce’s share price rose on Friday, adding 1.53 percent to close at 940.20p, largely in line with the broader market rally which saw the benchmark FTSE 100 index gain 125.83 points to end the session 1.67 percent higher at 7,682.27. The group’s shares have added a little over one percent to their value over the past year, as compared with about a 3.3-percent gain in the Footsie.

Deutsche Bank lifts valuation

Deutsche Bank lifted its price target on Rolls-Royce from 868p to 880p on Friday. Proactive Investors quoted the analysts as saying that the British engine maker would see its free cash flow increase from £273 million in 2017 to £1.2 billion by 2020 and possibly reach over £1.9 billion by 2023. The broker added that it was lifting its target price to reflect “EBIT upgrades offset by the cash costs of restructuring”.

The move comes after Rolls-Royce recently said in a Capital Markets statement that it was now well-placed to exceed its  free cash flow target of £1 billion by 2020, and unveiled a mid-term target of free cash flow per share to exceed £1.

Other analysts on engine maker

The 17 analysts offering 12-month price targets for Rolls-Royce for the Financial Times have a median target of 930.00p, with a high estimate of 1,279.00p and a low estimate of 675.00p. As of June 22, the consensus forecast amongst 21 polled investment analysts covering the blue-chip engine maker advises investors to hold their position in the company.  

As of 08:09 BST, Monday, 25 June, Rolls-Royce Holding PLC share price is 938.00p.

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