London, August 13, 2025 – Rolls-Royce Holdings plc (LSE: RR) shares surged this week after two leading U.S. banks—Citi and J.P. Morgan—boosted their price targets, reflecting upbeat forecasts for earnings, cash flow, and long-term growth potential. The dual upgrades come on the back of a rock-solid half-year performance and renewed investor confidence in one of the FTSE 100’s most closely watched stocks.
Citi and J.P. Morgan Lift Price Targets
Citi delivered a bold revision, raising its price target to 1,101 pence, up from 641 pence. The U.S. banking giant cited several key drivers behind its optimistic outlook:
-
A 23% increase in projected profits for 2025, and a 28% uplift forecast for 2029.
-
Free cash flow expectations raised by 13% for this year, climbing to a 20% increase by 2029.
-
A lift in the pace of anticipated mid-term profit growth, doubling from 4% to 8%, thanks to expected growth in the aviation fleet.
-
An additional 40 pence of valuation attributed to Rolls-Royce’s small modular reactor (SMR) ambitions, which could add a fourth leg to its business by the 2030s.
-
Overall, the 2025–2030 compound annual profit growth rate is forecast at 12.3%, with cash conversion projected to reach 120% before stabilizing around 114%
Similarly, J.P. Morgan raised its target to 1,245 pence, representing a 20% increase over prior estimates. Its upgrade is built on revised earnings-per-share estimates—particularly a notable 19% bump for 2025, partly due to a one-off provision release. J.P. Morgan flags Rolls-Royce’s diversified exposure—from commercial aerospace and data centers to German defense and a renewed push into civil nuclear power—as critical growth engines. The bank also lauded the company’s ongoing transformation efforts, emphasizing substantial efficiency gains and profitability improvements across its divisions.
Share Price Reaction and Market Valuation
Rolls-Royce shares went up around 2.5 pence in response to the positive predictions, bringing the price to about 1,074 pence in the afternoon.
Proactiveinvestors UK
This is another big step in the company’s amazing revival. Its share price recently crossed the 1,000 pence (£10) mark, which hasn’t happened since before the epidemic.
City AM reported earlier this month that the stock hit a new all-time high of almost 1,090 pence, giving Rolls-Royce a market value of about £90 billion. This shows how important it is again in the FTSE 100.
Momentum Fueled by Stellar Half-Year Results
The sharp rise in share price stems largely from an unexpected surge in financial performance during the first half of the year. According to City AM:
-
Underlying pre-tax profit soared to £1.68 billion, up from £1.03 billion a year earlier.
-
Underlying operating profit climbed by 50%, from £1.14 billion to £1.73 billion.
-
On a statutory basis, revenue rose from £8.86 billion to £9.49 billion, operating profit jumped from £1.64 billion to £2.07 billion, and pre-tax profit jumped sharply from £1.41 billion to £4.84 billion.
-
Underlying revenue increased from £8.18 billion to £9.05 billion.
In light of the results, Rolls-Royce reaffirmed its guidance for FY 2025, expecting to deliver an underlying operating profit of £3.1–£3.2 billion and free cash flow of £3.0–£3.1 billion.
Market Sentiment and Investor Reaction
Russ Mould, AJ Bell’s Investment Director, summed up the mood by saying:
“Rolls-Royce makes engines that are strong in more than one way.” The firm not only keeps planes securely in the air, but it also drives growth year after year.
“Shareholders are very happy because the higher earnings guidance will drive the share price even higher.”
Since October 2022, the price of Rolls-Royce shares has gone up by 1,442 percent. This means that investors who held on to their shares the whole time have profited more than 15 times their money.
City AM
His statements show how sure the market is that both short-term gains and long-term structural changes will happen.
Outlook: Momentum Continues?
With both Citi and J.P. Morgan projecting strong earnings, healthy cash flow, and visible growth opportunities—including the promising SMR space—the narrative around Rolls-Royce’s share price continues to brighten. The company now appears to be riding both cyclical aviation recovery and structural transformation.
Key Factors to Watch:
-
SMR progress: As a nascent growth avenue, milestones and clarity around the small modular reactor business could lend further valuation support.
-
Cash flow execution: Confidence is high, but delivering consistently high cash conversion in the coming years will be key.
-
Macroeconomic conditions: Aero demand, defense budgets, and data center growth remain potential tailwinds; conversely, economic slowdown risks could temper expectations.
-
Guidance consistency: Meeting or exceeding 2025 guidance and sustaining momentum into 2026 will reinforce the bullish stance from Citi and J.P. Morgan.
Rolls-Royce share price has clearly entered a new orbit. From doubling, tripling, and now surging past £10 per share—driven by exceptional half-year performance and powerful upgrades from Citi and J.P. Morgan—the stock has become a standout success story in the FTSE 100. As long as the company delivers on cash flow, executes on SMR ambitions, and maintains its multi-segment strength, market sentiment looks set to support further gains.
