Rolls-Royce share price analysis and earnings preview

The Rolls-Royce share price continued its strong comeback this week and reached a record high of 1,325p. It has soared by nearly 2,000% from its lowest level during the pandemic, when the company was at risk of filing for bankruptcy.

It has become a top gainer in the FTSE 100 Index and the seventh-biggest company in the UK. This article explores some of the top reasons why the stock may jump to 1,500p in the coming weeks.

Rolls-Royce Holdings to publish its financial results next week

The next important catalyst for the Rolls-Royce share price will be its financial results, which will come out on February 26. These results will provide more information about its performance and an outlook of what to expect in the coming months.

Odds are that the company’s business continued firing on all cylinders in the last half of the financial year as demand for its engines and services continued soaring.

Data compiled by its website shows that analysts are optimistic that its business continued doing well last year, with its underlying revenue rising to over £19.6 billion.

Analysts expect that this growth will continue in the foreseeable future, with the revenue rising to £21.6 billion this year, followed by £23 billion and £25.7 billion in the next two years.

The company’s profitability is expected to continue doing well in the coming years, helped by the revenue growth and the management’s cost optimization strategies. Analysts expect that its annual profit before tax will come in at £3.16 billion and then keep rising to £4.17 billion.

This growth is happening even though the company made a big mistake of exiting the narrow-body engine business many years ago. It now focuses on the wide-body engines, which are seeing weaker demand than the narrow ones.

For example, as we wrote earlier on, Airbus business is facing major headwinds because Pratt & Whitney, which is owned by RTX, has struggled to meet demand for the Airbus A320.

Chances are that the company's results will be better than what analysts expect as it has done in the past. For example, in its last trading statement, the management noted that it had received more orders for its Trent XWB-97-powered A390F from companies in China and Asian regions.

At the same time, the company will benefit from the ongoing demand for its defense equipment as geopolitical risks rise, with most analysts expecting that Donald Trump will attack Iran as soon as this weekend.

The daily timeframe chart shows that the Rolls-Royce stock price has been in a strong bull run in the past few years.

It has now flipped the important resistance level at 1,307p into a support. Flipping this resistance is an important aspect as it has invalidated the formation of a double-top pattern, a common bearish reversal sign in technical analysis.

The stock has remained above the 50-day and 100-day Exponential Moving Averages (EMA), while the Relative Strength Index (RSI)has moved above the neutral point at 50 and is nearing the overbought level of 70.

Therefore, the most likely scenario is where it continues rising, with the next key target being at 1,500p. The bullish outlook will be invalidated if it drops below the key support level at 1,200p.