Rolls-Royce share price outperforms as US unit wins Pentagon contract

on Dec 21, 2016
Updated: Oct 21, 2019

Shares in Rolls-Royce Holdings (LON:RR) have jumped about two percent higher this morning, as Reuters reported that the group’s US unit had won a $408-million modification to a contract with the Pentagon. The news is a boost for the UK group which is currently trying to recover from a string of profit warnings.

As of 09:11 GMT, Rolls-Royce’s share price had added two percent to stand at 689.50p, outperforming the benchmark FTSE 100 index which has climbed marginally higher and is currently 0.14 percent better off at 7,053.96 points. The group’s shares have gained just under a fifth this year, as compared with about a 13-percent rise in the Footsie.
Reuters quoted the Pentagon as saying in a statement last night that Rolls-Royce Corp of Indianapolis, Indiana, a unit of Rolls-Royce Holdings, had been awarded a $408-million (£300 million) contract. The order is a modification to an existing contract to to provide maintenance support for V-22 AE1107C engines for the US Marine Corps and Air Force.

The order is a boost for Rolls-Royce which is currently undergoing restructuring under chief executive Warren East who has been looking to turn around the company’s fortunes following a string of profit warnings. Last week, the company suffered another setback amid reports that Airbus’ plans to upgrade its A330 aircraft were behind schedule due to delays at the FTSE 100 group.
The 19 analysts offering 12-month price targets for Rolls-Royce for the Financial Times have a median target of 615.00p on the British engine maker, with a high estimate of 935.00p and a low estimate of 475.00p. As of December 17, the consensus forecast amongst 25 polled investment analysts covering the stock advises investors to hold their position in the company.
As of 09:52 GMT, Wednesday, 21 December, Rolls-Royce Holding PLC share price is 682.00p.

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