Where might the Rolls-Royce share price go in the next 12 months? Here’s what the experts say

The Rolls-Royce share price has had a terrific run in 2024, almost doubling in value. The big question now is, what could come next?

| More on:

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

2024’s been a spectacular year for the Rolls-Royce (LSE:RR.) share price. The engineering giant saw its market capitalisation explode as a new management team rights the ship and returned the business to profitability. And so far, the stock’s surged more than 80% since the start of the year.

But with so much growth already under its belt, investors are starting to wonder whether there’s still room for further upside. So let’s take a look at what the expert analysts have to say on the subject and whether I should be considering this business for my portfolio.

Rolls-Royce share price to hit 675p?

As of October, there are 18 institutional analysts following Rolls-Royce. For the most part, it seems that the overall sentiment’s quite positive, with 13 opinions sitting in either the Outperform or Buy categories.

OpinionAnalysts
Buy3
Outperform10
Hold4
Sell1
Strong Sell0

Yet, despite the largely positive sentiment from financial institutions, the Rolls-Royce share price forecasts are where things start to look less promising.

It’s true that one analyst has predicted the stock could rise as high as 675p by this time next year. Compared to the current share price, that suggests a potential upside of more than 20%. However, this is the most optimistic outlook for the business, with the most negative projection suggesting its share price could collapse by as much as 56%!

On average, it seems most analysts believe the stock is fairly valued at 552.50p, which is very close to its current trading level. In other words, Rolls-Royce seems to have its expected growth potential already baked into its valuation.

But what could happen next that would change that, either for better or worse?

What could go wrong… or right?

Let’s start with the negatives. A big catalyst behind Rolls-Royce’s comeback’s the rebounding travel market. Yet, looking at the latest results from airline companies, it seems that airfare pricing’s getting weaker.

One potential explanation here is the softening demand for travel as delayed holidays have started to take place. And since many of the group’s engine maintenance contracts are based on the number of hours flown, this slowing trend could have knock-on effects on Rolls-Royce’s revenue growth.

On a more positive note, the group’s mini-modular nuclear reactors remain on track to launch before the end of the decade. Given that the UK government’s begun expressing an interest in cost-effective nuclear energy options, the company looks primed to receive a lot of new orders, providing it can deliver on expectations. And since the UK’s not the only country exploring nuclear energy, Rolls-Royce could be set to reap enormous long-term returns on this project.

Time to buy?

As promising as Rolls-Royce’s long-term potential looks, the business is still currently dominated by its Civil Aerospace division. And right now, that’s the segment which is tackling a growing volume of uncertainty. Having already experienced a massive surge in valuation, I wouldn’t be surprised to see the Rolls-Royce share price take a hit if growth starts to slow. Therefore, I’m staying on the sidelines for now despite the optimistic outlook of analyst opinions.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Rolls-Royce Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

US Stock

The Nvidia share price falls! Here’s what I think happens next for the S&P 500

Jon Smith reviews the overnight results from Nvidia and explains why this could stall the S&P 500 performance through to…

Read more »

Investing Articles

Down 15% today, is this FTSE 100 share too cheap for me to miss?

JD Sports' share price has tanked after the FTSE 100 share released another profit warning. Is this the opportunity I've…

Read more »

Investing Articles

Up 8% today, is this FTSE 100 growth stock a slam-dunk buy for me?

Halma's share price is soaring thanks to another headline-grabbing trading update. Is the FTSE 100 stock now too good for…

Read more »

Investing Articles

With a P/E ratio of just 10.5 is now a brilliant time to buy a cut-price FTSE 250 tracker?

Harvey Jones says a recent dip in the FTSE 250 leaves the index trading at bargain levels. One stock in…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

To build a passive income flow, I’d follow this Warren Buffett approach

Warren Buffett has set up passive income streams most people can only dream about. Our writer sees some practical lessons…

Read more »

Growth Shares

As the boohoo share price falls, could it become a penny stock in 2025?

Jon Smith outlines some of the recent problems involving the boohoo share price and considers if things could get even…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

Here are the worst-performing FTSE 100 shares over the last 5 years

These five FTSE 100 shares have been complete duds over the last half decade. But is there potential for a…

Read more »

Investing Articles

Nvidia stock has tripled this year! Can it keep rising?

Nvidia's latest sales update showed strong growth and the stock's been on a tear so far in 2024. So is…

Read more »