The Rolls-Royce Holdings‘ (LSE: RR.) share price spike on results day at the end of February took me by surprise. After what the company has achieved in its recovery, I was expecting something good. But not that good.
Have you ever thought that waiting for a share price to fall and give us a better buying opportunity might sometimes be a bit silly? Well, that’s what I was doing. And with hindsight, silly is exactly how it looks now.
I’d have done better if I’d remembered billionaire investor Warren Buffett‘s words: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” He said that as long ago as 1989. You’d think I might have learned by now.
Should you invest £1,000 in Rolls-Royce right now?
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£10, really?
With Rolls-Royce shares hovering close to the £8 level, at the time of writing, is it realistic to hope for £10 any time soon? There are some experts out there who seem to think so.
In early March, investment bank UBS reiterated its Buy recommendation on the stock. And it lifted its target price to exactly what we’re talking about, bang on £10. That’s a further 25% gain on top of the 40% year-to-date climb we’ve already seen in 2025.
In fact, the range of broker price targets reaches as high as £11.50 in one case, with a majority of forecasters rating the stock a Buy.
But there’s always one party pooper, isn’t there? In this case it’s Berenberg, with a Sell rating and a price target of a tiny 240p. Yes, it expects the Rolls-Royce share price to crash 70%. And it’s not just an out-of-date rating either, as we often see. No, Berenberg repeated its Sell stance on results day.
That lowball call drops the average price target to only about where the stock is now. But the wide range shows that using just that figure really doesn’t tell us much.
Even higher?
I’ll tell you one expert whose views I value above these City folk with their short-term horizon. It’s my Motley Fool colleague Simon Watkins. Simon’s a whizz when it comes to discounted cash flow analysis. That’s a technique that estimates the future stream of cash expected from an investment, and works out what it could be worth today.
On that basis, he believes Rolls shares could be undervalued at anything up to around £12.40. Whether it works out like that in practice will depend on a lot of things, not the least of which is the dependability of forecasts. But it can be an objective way to try to cut through the hype that so often clouds the headlines.
So might the share price reach £10? Based on fundamentals and forecasts, I really do see a good chance of it, although it isn’t guaranteed and it could go in the opposite direction.
In the short term however, I think sentiment could send it either way, even against the current momentum. Still, I reckon anyone who can put that aside could do well to consider Rolls-Royce for its long-term potential.
