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Rolls-Royce share price: Jefferies points to long-term operational issues

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Jefferies continues to see Rolls-Royce Holdings (LON:RR) as a ‘buy,’ while pointing to the group’s long-term operational issues, Citywire reports. The comments follow the engine maker’s annual general meeting (AGM) statement yesterday.

Rolls-Royce’s share price fell in the previous session, shedding 0.81 percent to close at 830.00p. The group’s shares marginally underperformed the broader UK market, with the benchmark FTSE 100 index losing points to end the session 0.54 percent in the red at 7,502.69.

Long-term issues

Jefferies reiterated its ‘buy’ rating on Rolls-Royce yesterday, with a price target of 1,100p on the shares. The comments came after the British engine maker issued an AGM statement, saying that that the year had started well, with trading in line with the company’s expectations. Rolls-Royce further maintained its profit and cash expectations for the current year, having previously warned that it needed to increase the number of inspections of its Trent 1000 engines, with the move expected to result in higher costs.

“The group has been slimmed down from five to three divisions,” the broker’s analyst Sandy Morris pointed out, as quoted by Citywire. “Significant progress has been made in developing more maintenance, repair, and overhaul capacity to address the Trent 100 issues [which has seen problems with aircraft engines].”

The analyst, however, noted that while this all was ‘satisfactory,’ the broker was wondering “whether by keeping attention focused on the short-term we are glossing over the strategic and operational issues that are ultimately more important”.

Other analysts on group

Liberum Capital reiterated its ‘hold’ rating on Rolls-Royce yesterday, without specifying a price target on the shares. According to MarketBeat, the blue-chip engine maker currently has a consensus ‘hold’ rating and an average price target of 939.82p.

As of 08:13 BST, Friday, 04 May, Rolls-Royce Holding PLC share price is 830.00p.

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