Hargreaves Lansdown argues that while Rolls-Royce Holdings’ (LON:RR) chief executive Warren East has driven change at the engine maker, he is yet to get the group ‘firing on all cylinders,’ Citywire reports. The move came after the blue-chip company updated investors on its full-year performance yesterday, delivering a rise in revenue, while reporting that it had decided to pull out of a competition to power a new Boeing platform.
Rolls-Royce’ share price fell in the previous session as investors digested the updates, giving up 2.83 percent to close at 955.00p, and underperforming the broader UK market, with the benchmark FTSE 100 index ending the session 0.46 percent lower at 7,074.73 points. The engine maker’s shares have extended their loss marginally in early morning trade today, having shed 0.29 percent to 952.20p as of 08:08 GMT, compared with a 0.44-percent gain in the Footsie.
HL weighs in on Rolls-Royce
Citywire quoted Hargreaves Lansdown’s analyst George Salmon as commenting yesterday that large numbers of Rolls-Royce’s “Trent 1000 powered aircraft have been grounded, generating a significant repair bill”. The analyst reckons that there are “bright spots, such as the £611-million net cash position and £568 million of free cash flow, a critical figure for Rolls since management put it front and centre of the investment case”.
Salmon, however, adds that “there are asterisks attached to the progress,” and that while the engine maker “deserves credit for freeing up cash by changing its supplier terms, much of the improvement is being driven by extra upfront payments and £70 million of restructuring costs have been excluded”.
Other analysts on engine maker
Jefferies reaffirmed Rolls-Royce as a ‘buy,’ valuing the shares at 1,100p. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average price target of 976.42p.