Rolls-Royce Has Continued Supply Chain Constraints – Morgan Stanley

Rolls-Royce (LON: RR.) shares gained Tuesday after Morgan Stanley initiated coverage of the aerospace giant with an Equal Weight rating and a 166p per share price target.

The RR stock price climbed 0.5% during the session to 150.9p per share, maintaining the recent sideways movement, following a strong run at the back end of last year and into early 2023.

The investment bank has a neutral view of the stock based on continued supply chain constraints. Analyst Ross Law initiated coverage of the European Aerospace sector but noted his firm has a preference for aftermarket suppliers.

The analyst told investors in his note that older aircraft will probably remain in service for longer, yielding profitable aftermarket sales not reflected in Rolls-Royce’s current through-cycle average valuation multiples.

Elsewhere on Tuesday, Barclays analyst Charlotte Keyworth increased the firm’s price target on Rolls-Royce to 156p from 145p, keeping an Equal Weight rating on the shares stock.

According to TipRanks, three analysts currently have a Buy rating on Rolls-Royce, with three assigning the stock a Hold rating and one a Sell rating. The average price target is 178.14p, representing a potential 18% upside.

By Sam Boughedda