Citi hikes Rolls-Royce price target
By Michele Maatouk
Date: Monday 11 Aug 2025
(Sharecast News) - Citi hiked its price target on Rolls-Royce on Monday to 1,100p from 641p, highlighting three main reasons for the move and saying the stock is "expensive on profits multiples" and "about right on cash".
Firstly, the bank pointed to increasing explicit forecasts. Citi said it has increased its 2025 profit forecast by 23% and 2029 by 28%. In addition, the bank's free cash flow forecasts have also risen by 13% this year, rising to 20% in 2029.
Secondly, Citi noted an increased mid-term (2030-34) implicit profit growth assumption from 4% to 8%, broadly in line with expected fleet growth.
Thirdly, the bank pointed to around 40p of value for SMR.
"Rolls-Royce may look expensive on profit multiples, but it is in line on cash metrics, which we believe more important," Citi said.
"We forecast 12.3% profit compound annual growth rate over 2025 to 2030 and cash conversion peaking at 120% before trending down to 114%, which we use for our valuation."
Citi rates the shares at 'neutral'.
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