Rolls Royce Share Price Resurges As Focus Turns to Earnings

Summary:
• Rolls Royce share price has bounced back after backfooting last week, and this week's earnings could define medium-term trend.

Rolls Royce share price returned to the upside on Monday, ending a three-day decline after rising by 0.5% to trade at GBX 615 at the time of writing. The stock rose to historic highs of GBX 649.8 last week as investors reacted to its growing order book. The recent decline is likely due to short-term profit-taking, with the resumption of the uptrend linked to the forthcoming earnings release.

The civil aviation and defense engineering company has seen its share price gain 8.1% year-to-date, continuing with a trend that saw it nearly double its value in 2024. The company’s upside is supported by an uptick in post-pandemic civilian air travel, and strong defence spending by NATO-allied countries following the Russia-Ukraine war. Most recently, it won a £9 billion contract to upgrade the UK’s nuclear submarines.

Rolls Royce (LON: RR.) has an ambitious £2.5 billion-£2.8 billion target for operating profit in the medium-term, which is likely to keep investors upbeat. The company will announce its earnings for the quarter ending December 2024 on Thursday, and analysts estimate profirs of £2.3 billion, and £2.6 billion in free cash flow.

The price volatility on Rolls Royce share price will depend on the degree of deviation of the reported results from the forecasts. A key area of struggle for the company might come in form of its ability to meet the delivery timelines for its strong order book. Some of the contracts could face supply chain challenges and/or challenges associated with integration of new technology. Such an outcome could limit the stock’s upside.

Rolls Royce Share Price Prediction

Rolls Royce share price pivot at GBX 611 and the momentum favours the buyers to be in control above that level. The stock wil likely meet the first resitance at GBX 617. However, a stronger momentum will break abive that level and potentially encounter the second hurdle at GBX 622.

Conversely, moving below GBX 611 will signal a shift in the momentum to the downside. In that case, the first support is likely to be at GBX 607. An extended control by sellers will break below that level and potentially test GBX 600.