- Rolls-Royce Holdings
- 11 August 2025 08:02:59
Source: Sharecast
Firstly, the bank pointed to increasing explicit forecasts. Citi said it has increased its 2025 profit forecast by 23% and 2029 by 28%. In addition, the bank’s free cash flow forecasts have also risen by 13% this year, rising to 20% in 2029.
Secondly, Citi noted an increased mid-term (2030-34) implicit profit growth assumption from 4% to 8%, broadly in line with expected fleet growth.
Thirdly, the bank pointed to around 40p of value for SMR.
"Rolls-Royce may look expensive on profit multiples, but it is in line on cash metrics, which we believe more important," Citi said.
"We forecast 12.3% profit compound annual growth rate over 2025 to 2030 and cash conversion peaking at 120% before trending down to 114%, which we use for our valuation."
Citi rates the shares at ‘neutral’.