Rolls-Royce Shares Jump After Jefferies Cites Several Positive Catalysts

  • Rolls-Royce closed 6% higher on Tuesday
  • Jefferies upgraded the firm to Buy
  • Easing China restrictions encourages outgoing CEO

After a considerable decline last year, Rolls Royce shares have stormed out of the gate, closing 6% higher on Tuesday, boosted by hopes of a lift-off to the aero-engine business.

The potential recovery in travel has aided the boost to Rolls Royce shares, which is now trading up 34% over the last three months.

Rolls Royce also saw its shares upgraded at Jefferies, from a Hold to a Buy, with a price target of 125p. Analyst Chloe Lemarie sees a number of positive catalysts for the group in 2023, including potential credit upgrades and further flight hours recovery which should build confidence on the group’s mid-term potential.

The firm was also initiated with an Overweight rating at Barclays a little over a month ago, again citing an engine flight-hour recovery but also expectations of rising Chinese demand once the Covid restrictions would be lifted.

Furthermore, outgoing CEO of Rolls Royce recently told the BBC that he believes long-haul aviation will hit pre-pandemic levels by 2024.

After navigating a difficult period, Warren East told reporters the interviewer that short-haul travel is “pretty much” back at pre-pandemic levels but the long haul space is still at “about 70%.” East also stated that the news of China easing restrictions was very encouraging.

East added: “By maybe 2024 or 2025, we should be back at pre-pandemic levels, but that, of course, means that the rest of the economy has significantly grown in the meantime.”

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