Is the Rolls-Royce share price heading to its all-time high?

Rolls-Royce share price has rebounded this week, helped by the rising hopes of a US-Iran deal, and after a recent Bloomberg interview with its chief executive in which he highlighted the company’s turnaround efforts. It jumped to 1,260p, up substantially from this month’s low of 1,050p.

Rolls-Royce CEO explains his turnaround strategy

Rolls-Royce Holdings, one of the biggest players in the jet engine manufacturing industry, has rebounded this week. In a Bloomberg interview this week, CEO Tufan Erginbilgiç noted that the company had made major achievements during his tenure, as evidenced by the 1,000% surge in its stock price.

His tenure has benefited from several internal and external factors. Internally, the management has slashed thousands of workers, which has helped it to conserve cash. 

At the same time, the company has sold its underperforming divisions, in its bid to focus on the most profitable businesses. It is also exploring ways to return to the narrow-body engine industry that is thriving. 

Rolls-Royce is also becoming a major player in the data center industry, where it is building power equipment for data centers. 

External factors have also played a role in its turnaround strategy. For one, aircraft engine orders have jumped in the past few years, as evidenced by the growth of its peers like GE Aerospace, Safran, and RTX, which owns Pratt & Whitney.

US-Iran ceasefire deal

The company’s stock has benefited from the potential deal between the United States and Iran. Trump has hinted that a deal will happen soon. Media reports suggest that this will be a 60-day ceasefire that will reopen the Strait of Hormuz in exchange for financial incentives, including sanctions relief. 

A sustained ceasefire and the end of the war will benefit Rolls-Royce because of its booming civil aviation business. The company makes most of its money in long-term contracts with top airlines, including Lufthansa, Delta Air Lines, Virgin Atlantic, and IAG. It also provides its services to companies like Emirates, Singapore Airlines, and Qatar Airways. 

Rolls-Royce Holdings is benefiting from the ongoing return of long-haul flights. Data shows that air traffic in the Middle East has largely normalized this year.

The company is now optimistic that it will hit its targets this year. It now expects that its operating profit will jump to between 4 billion and 4.2 billion pounds this year. Also, the free cash flow is expected to jump to between 3.6 billion and 3.8 billion pounds. The management said:

“We remain strongly positioned to deliver our mid-term targets, with substantial growth beyond the mid-term from both our existing and new businesses.”

Rolls-Royce share price technical analysis

RR stock chart | Source: TradingView

The daily chart shows that the RR stock price bottomed at 1,053p this week and then quickly rebounded to 1,261p. This price is along the descending trendline that connects the highest swings since February 26. 

The stock has remained above the 50-day and 100-day Exponential Moving Averages (EMA). It has also remained above the Supertrend indicator, a sign that bulls remain in control.

Therefore, the stock will likely continue rising, potentially to the all-time high of 1,418p, its highest point in February this year. The bullish outlook will become invalidated if it drops below the key support level at 1,000p.