Rolls-Royce share price: JPMorgan lowers valuation on engine maker

on Jan 11, 2019
Updated: Oct 21, 2019

JPMorgan has lowered its price target on Rolls-Royce Holdings (LON:RR), pointing to multiple company-specific as well as sector-wide headwinds, WebFG News has reported. The analysts further lowered their estimate for the engine maker’s earnings per share for the current year.

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Rolls-Royce’s share price has climbed higher in London this morning, having gained 2.40 percent to 880.47p as of 09:56 GMT. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.59 percent higher at 6,984.17 points. The group’s shares have added about 5.5 percent to their value over the past year, as compared with about a 10-percent loss in the Footsie.

JPMorgan lowers RR’s valuation

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JPMorgan lowered its price target on Rolls-Royce from 800p to 700p this week, and trimmed its estimates for the group’s earnings per share in 2019 by nine percent. WebFG News quoted the broker’s analysts David Perry and Sean Stewart as saying in a note to clients that while the group’s management was hard at work fixing the many issues facing the firm, several hurdles were becoming increasingly difficult.

The broker said those included problems with the Trent 1000 engine and pressures on it to increase outlays on R&D, the expected negative impact from IFRS 16 which would increase its net debt, weak demand for several engine types and execution issues such late deliveries and in-service problems with the Trent 1000. JPMorgan further pointed to problems in the wider sector, including Boeing’s expected launch of a new jet which would force suppliers and rivals to increase R&D, IFRS 16, budget worries in the US and Europe, and Brexit.

Other analysts on engine maker

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The 16 analysts offering 12-month price targets for Rolls-Royce for the Financial Times have a median target of 977.50p on the shares, with a high estimate of 1,250.00p and a low estimate of 675.00p. As of January 5, the consensus forecast amongst 19 polled investment analysts covering the blue-chip group advises investors to hold their position in the company.

As of 10:07 GMT, Friday, 11 January, Rolls-Royce Holding PLC share price is 880.47p.

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