Rolls-Royce share price rose by over 1% on Wednesday as investors bought the dip as the management entered a sales mode to win back Boeing. It jumped to 1,247p, a few points below the all-time high of 1,327p.
Rolls-Royce Holdings is aiming to woo Boeing
Rolls-Royce Royce stock has been on a strong upward trend in the past few years, making it one of the best-performing companies in the FTSE 100 Index.
The company’s rally happened as demand for its engines and services have continued rising in the past few years. It has moved from being a “burning machine” into one of the most profitable companies in the UK. It also achieved its mid-term targets two years ahead of schedule.
Rolls-Royce’s share price jumped on Wednesday after the company announced that it will focus on growing its business by partnering with Boeing, a top aircraft manufacturer.
The company aims to win against Boeing with its newly upgraded Trent 1000 XE engine, which promises more durability and fuel consumption. It hopes to win orders for Boeing 787 and Boeing 777, which mostly use engines from General Electric Aerospace.
Rolls-Royce Holdings hopes to win orders from companies like Malaysia Airlines and British Airways, which opted for General Electric engines.
Most importantly, the company confirmed that it is aiming to re-enter the narrow-body segment that has boomed in the past few years. The company abandoned its role on the International Aero Engines consortium in 2012 that built the V2500 engine for the original Airbus A320.
Rolls-Royce Royce is aiming to re-enter the business through partnerships, possibly using a modified version of the Ultrafan engine platform.
The next important catalyst for the Rolls-Royce share price is the upcoming financial results, which will come out later this month. In its recent trading statement, the company said that it will make an operating profit of between £3.1 billion and £3.2 billion, while its free cash flow will move to between £3.0 billion and £3.1 billion.
Rolls-Royce share price technical analysis
The daily timeframe chart shows that the Rolls-Royce stock price has pulled back in the past few weeks, moving from the all-time high of 1,320p to the current 1,250p.
A closer look shows that the stock has remained above the 50-day and 100-day Exponential Moving Averages (EMA). It has formed a bullish flag pattern, which is made up of a vertical line and a descending channel.
Therefore, the most likely scenario is where it continues rising as bulls target the year-to-date high of 1,320p. A move above that level will point to more gains, potentially to the psychological level at 1,500p, which is about 20% above the current level.
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