- Rolls-Royce Holdings
- 23 June 2025 09:32:17
Source: Sharecast
The bank nudged up its 2026-2028 earnings per share estimates by 1-2%, with better prospects in most markets, partly offset by the weaker US dollar FX rate.
"We think this is a good outcome given that we recently had to lower our estimates for some other European Civil Aerospace companies due to the weaker US dollar," it said.
JPM said it was increasing the multiples-based price target as it applies higher target multiples to its free cash flow estimates.
"In recent years we have grappled with how to value RR, given that its medium-term FCF is boosted by its business model (RR collects significant advance payments on long term service agreements)," it said.
"However, even if we apply a haircut to our FCF estimates for these advance payments, RR is still trading at a very large discount to Safran and GE on FCF yield."
JPM said it sees scope for this discount to reduce if RR continues to deliver strong results, as it expects.
The bank maintained its ‘overweight’ rating on the shares.