9th October 2013
As the aviation industry demands ever more efficient engines stockbrokers are tipping Rolls Royce shares as a firm ‘buy’ writes Philip Scott.
The group once famous for its prestige cars, sold the business back in1980 but retained the rights to the brand name. Today it provides power systems and services to, among others, the defence aerospace, marine and energy markets.
Some 300 airlines represents just part of its broad customer base. The firm has been doing very well with both initial sales of engines and drive systems and after sales contracts for repairs and maintenance.
Just this week the engineering giant received an order for 31 Airbus A350 XWB aircraft, which are powered by Rolls-Royce Trent XWB engines from Japan Airlines.
Annual underlying revenues were £12.2bn in 2012 and while the past year has seen its shares rise by 25%, over the past three months they have dropped back by 9%, which brokers believe presents savvy investors with a buying opportunity into a quality company.
Broker sentiment on share data website Digital Look has the stock edging towards a ‘strong buy’ and stockbroker The Share Centre, is also upbeat on the business.
Helal Miah, investment research analyst at The Share Centre, says: “With the company delivering strong revenues and earnings amid the backdrop of a weak global economy, we believe Rolls Royce still has more to deliver for investors, especially if the world economic woes show signs of fading.
“The airline industry is demanding ever more efficient engines for which Rolls Royce should be a key beneficiary. Going forward to improve margins there may be more of a focus towards cost control measures. We recommend Rolls Royce as a ‘buy’ for long-term investors seeking a medium level of risk.”