Rolls-Royce share price pared back some of the losses made earlier this month as Donald Trump’s trade war eased. After bottoming at 560p on April 7, it has soared to a high of 790p on Thuesday, a few points below the all-time high of 815p. So, will the stock keep rising and possibly hit 1,000p as some analysts estimate?
Rolls-Royce business is doing well
Rolls Royce is a top company that is involved in three key industries like civil aviation, power, and defense.
Its civil aviation business involves manufacturing popular engines like the Trent series that is used for aircraft like Boeing 787, Airbus A380, Airbus A350 XWB, and Airbus A330.
The company also builds engines in the pearl series that are mostly used by private jets like Gulfstream and Bombardier. Its AE series engines are turboprop, turbofan, and turboshaft that are mostly used by regional aircraft.
Rolls-Royce makes its money in civil aviation in two main ways: engine sales and long-term service contracts. In some cases, the company is usually sells its aircraft engines at a breakeven or a loss, and then enters long-term service contracts with airlines.
It uses the power-by-the-hour and the TotalCare options. In the power-by-the-hour approach, airlines pay the company for every hour that they operate their engines. This ensures that the maintenance fees are spread out over time.
The company also builds engines for other industries, like the military and power solutions for data centers. Analysts believe that its data center business will continue doing well over time as demand for artificial intelligence solutions rose.
RR stock jumps after Trump pauses its tariffs
The main reason why the Rolls-Royce stock price surged is that Donald Trump paused his Liberation Day tariffs on some countries.
Rolls-Royce is exposed to these tariffs in several ways as a global manufacturer. First, the tariffs increase its cost of doing business. For example, Trump has already imposed a 25% tariff on steel and aluminum, two metals that the company uses in its manufacturing.
Also, Trump placed a universal tariff on all goods entering the United States, where the company has substantial operations. These tariffs would make its cost of doing business more expensive and worsen the supply chain concerns it has had in the past few years.
The tariffs would also affect aircraft orders, especially from Boeing, a company that has come under pressure in over five years.
Read more: Will the surging Rolls-Royce share price 1,000p in 2025?
Most importantly, there is a likelihood that these tariffs would raise costs and affect the civil aviation by leading to lower demand.
Still, there is a likelihood that the company’s business is strong enough to sustain its operations. For one, its recent financial results showed that it has already achieved its mid-term targets ahead of schedule, meaning that shareholders may receive higher dividends going forward.
The full-year results showed that its operating profits rose to £2.5 billion, while its margins jumped to 13.8%. Its free cash flow came in at £2.4 billion. It paid 6p per share in dividends, a figure that may keep growing.
Rolls-Royce share price analysis
RR stock chart by TradingView
The daily chart shows that the RR stock price crashed to 562p as the tariff crisis escalated. It then bounced back and moved to almost 800p after Trump paused some of these tariffs. It has remained above the 50-day and 100-day moving averages, a sign that bulls remain in control for now.
Therefore, more upside, potential to the key resistance at 1,000p, will be confirmed if the stock rises above the key resistance level at 817p, the highest point this year. Moving above that level will validate the bullish outlook by confirming that there are more buyers left in the market.
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