JP Morgan bullish on aerospace but not on Rolls-Royce.

Analysts at JP Morgan sounded a bullish note on the outlook for the European civilian aerospace and defence sectors, but with the notable exception of Rolls Royce.

Source: Sharecast

They forecast "solid" multi-year growth as civilian air traffic continued its recovery from Covid-19 while Defence was heading into a 5-10 year cycle of higher spending.

Rolls Royce's earnings before interest, taxes and amortisation on the other hand were "too low".

Indeed, the only way it could generate free cash flow was by collecting customer advances on long-term contracts, JP Morgan noted.

Furthermore, adjusted net debt, on JP Morgan's definition, which included customer advances, pension liabilities, money owed to joint-ventures and cash provisions, of about £15bn, meant the balance sheet was "very weak".

The broker also highlighted how the recovery in wide body engine flying hours predicted by the engineer in late 2020 had failed to materialise.

Hence, JP Morgan stuck to its 'underweight' recommendation and 70.0p target price for the company's shares.

Rolls-Royce Holdings ( RR. )

ISIN: GB00B63H8491

Exchange: London Stock Exchange

Sell:

797.00 p

Buy:

800.00 p

Change: -4.00 ( -0.50 %)

Date:

14/05/2025 - 17:15

Prices delayed by at least 15 minutes

Compare our accounts

If you're looking to grow your money over the longer term (5+ years), we have a range of investment choices to help.

View our accounts

Halifax is not responsible for the content and accuracy of the Markets News articles. We may not share the views of the author. Understand the risks, please remember the value of your investment can go down as well as up and you may not get back the full amount you invest. We don't provide advice so if you are in any doubt about buying and selling shares or making your own investment decisions we recommend you seek advice from a suitably qualified Financial Advisor. Past performance is not a guide to future performance.