Credit Suisse upgrades Rolls-Royce as Trent 1000 issues on the mend
By Michele Maatouk
Date: Wednesday 13 Feb 2019
(Sharecast News) - Rolls-Royce got a boost on Wednesday as Credit Suisse upped its stance on the stock to 'outperform' from 'neutral' and hiked the price target to 1,065p from 900p as it said issues with the Trent 1000 engine seem to be on the mend.
CS said the engine, which powers the Boeing 787, has been the key execution impediment to the case but now appears to be showing signs of improvement.
"A technical fix for the main issue has been certified at the end of December 2018 and has just started to be installed on grounded engines. Storage data shows that the number of parked aircraft/engines has been reducing steadily for four months now, reducing the pressure on both airlines and Rolls-Royce," it said.
With that issue back on the right path, a key downside risk to free cash flow expectations is lifted, the bank said.
Investors can now concentrate on the pace of the reorganisation launched in June 2018 and the Trent XWB strong performance.
CS added that it's now more comfortable with the company's ability to deliver on its 2020 target of around £1bn of free cash flow.
At 1530 GMT, the shares were up 3.2% to 942.80p.
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