Deutsche Bank raises Rolls Royce target price, but still downbeat
(ShareCast News) - Analysts at Deutsche Bank bumped up their target price on Rolls Royce ahead of the engineer's first half results due out on 1 August, telling clients the focus won't really be on those numbers, per se.
As well, the new target price was the result of the broker rolling forward its valuation models for another year and pointed to 40% downside in the company's share price.
Indeed, Deutsche reiterated its 'sell' recommendation on the stock, telling clients it was expensive.
Investors' focus would be on the company's restated fiscal year 2016 numbers under IFRS15, according to Deutsche.
Rolls Royce's cash flow targets for 2020 would also attract attention, as would the new Finance Director's comments regarding the aforementioned and regarding the scope for any changes in its financial disclosure. they said.
Analysts were expecting a free cash flow target for 2020 of between £800m and £1.5bn.
Regarding the manufacturer's first half numbers, the broker was anticipating total top-line growth of 7.5%, with civil aerospace up 8% and aftermarket by 4%.
Sales at Rolls's Power Systems unit were seen increasing by 22%, but Marine would be a drag, with revenues down by 10%.
Deutsche's new target price for the shares was 570.0p, up from 525.0p previously.