Rolls-Royce share price has been in a strong rally this year and is trading at a record high of 1,150. It is one of the top gainers in the FTSE 100 Index after soaring by almost 100% this year. So, can it jump to 1,250p as analysts at Goldman Sachs expect?
Goldman Sachs is bullish on the Rolls-Royce share price
Rolls-Royce stock price received a major boost last week when Goldman Sachs analysts boosted their estimate. In a statement, the analysts noted that the stock would jump by about 9% to 1,250 in the near term.
The analysts noted that, while most of the catalysts were already priced in, the company has more upside going forward. Precisely, the analysts cited improvements on wings, long-term service agreements pricing, and sustained demand in the power segment.
Goldman sees the company making £4.9 billion in free cash flow in 2028, higher than the management’s guidance of between £4.2 and £4.5 billion.
Rolls-Royce has exceeded its performance in the past. For example, in earlier this year, the management noted that it had achieved its mid-term targets 2 years ahead of schedule.
RR has key catalysts
The Rolls-Royce stock price rally could continue because of its numerous catalysts. One of these catalysts is that the company has become a major player in the nuclear industry, which analysts believe is the future.
A good example of this is in the United States, where the Oklo stock price has gone parabolic and reached a high of $140, bringing its market capitalization to over $15 billion. Oklo has jumped by over 2,000% from its all-time low as investors bet on its small modular reactor business. Similarly, NuScale Power has soared by over 2,240% from its lowest level last year.
Rolls-Royce Holdings is one of the top names in the nuclear energy, together with other names like Westinghouse Electric, GE Hitachi, and Holtec. It has also ventured into the SMR industry and has already won a contract with the UK government.
In a recent report, which Rolls-Royce has denied, the company is in talks to raise money for the unit, including an IPO. Such a move would be bullish for the company as the SMR unit would likely achieve a similar valuation multiple to Oklo and NuScale.
The other potential catalyst for the company is that the civil aviation division is doing well as the sector continues thriving. The most recent results showed that the civil aviation industry made over £4.7 billion in revenues, up by about 17% from the same period last year.
The company, like other European defense names like Rheinmetall, will also benefit from the ongoing surge in spending by European countries.
Rolls-Royce stock price technical analysis
The other bullish catalyst for the Rolls-Royce stock price is that it has become a momentum play. It remains above the 50-day and 100-day Exponential Moving Averages (EMA).
Also, the stock recently moved above the key resistance at 1,110p, invalidating a double-top pattern that has happened recently. Also, top oscillators like the Relative Strength Index (RSI) and the MACD have continued soaring.
Therefore, the most likely scenario is where the stock continues rising, with the next important level to watch being the Goldman Sachs target at 1,250p.
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