Rolls-Royce Upgraded by Analysts

Morningstar equity analysts have upgraded Rolls-Royce's fair value estimate as restructuring will lower its costs by £400 million a year by the end of 2020

Jeffrey Vonk 15 June, 2018 | 4:04PM

Rolls-Royce engines

Morningstar equity analysts are upgrading the fair value estimate for Rolls-Royce (RR.) shares to £11.40 after it announced a significant restructuring which will save around £400 million a year, with the loss of thousands of UK jobs. The company's shares rose nearly 10% today to 950p, and the company has a four-star rating from Morningstar, which means that its shares are currently undervalued.

Close to 60% of the fair value estimate increase relates to the benefits of the recently announced restructuring, while 50% of the increase results from a more positive stance on the power systems division's profits in 2018-20.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Rolls-Royce Holdings PLC263.20 GBX-10.02

About Author

Jeffrey Vonk  is an equity analyst with Morningstar.

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