Rolls-Royce shares down 19%. Why is this major broker still as bullish as ever?
Rolls-Royce shares have slipped almost 19% from their early March high of 1,363p, recently changing hands for just above 1,100p. But the drop doesn’t appear to have fazed analysts, with one major broker team doubling down on previous targets.
On 25 March, Goldman Sachs reiterated its Buy rating and nudged its target price up to 1,400p, suggesting no fear of a drawn out correction.
So why is the investment bank still so upbeat after such a severe dip? Could Goldman see something the rest of us are missing? If so, the move could offer a chance to scoop up some cheap shares before recovery.
But before diving in, what are other analysts saying?
An optimistic outlook
Across the market, the mood is broadly positive. Consensus from 15 analysts sits at a Strong Buy rating, with an average 12âmonth price target of 1,442p â roughly 30% above todayâs level. This suggests many brokers also see further gains ahead — likely why investors view this pullback as nothing more than a short-term wobble.
Platforms such as AJ Bell report that DIY investors have been ‘buying the dip’ in travel names such as IAG and easyJet after recent volatility. If people expect longâhaul flying to remain strong, thatâs indirectly good news for Rolls-Royce, which makes and services many of the engines that power those aircraft.
Looking closer
Under the cowling, the latest numbers help explain the bullishness. Rolls-Royce recently reported a 40.6% jump in underlying operating profit to about £3.46bn for 2025, comfortably ahead of earlier guidance. Management also upgraded its 2026 and 2028 profit and cashâflow targets, signalling confidence that todayâs strength is not just a oneâoff.
Cash generation has been strong enough for the group to relaunch its dividend at 9.5p per share and announce a multiâyear share buyback programme running to 2028. In simple terms, that means more cash going back to shareholders, which often supports a higher share price over time.
Macro trends are working in its favour too. Longâhaul engine flying hours recently rose above preâpandemic levels, boosting highâmargin servicing income. Meanwhile, demand for its defence and power systems segments is being helped by higher military spending and data centre proliferation.
Itâs easy to see why Goldman Sachs remains bullish on the shares and why they may still be worth considering.
Any reason to worry?
Naturally, no investment comes without risk. In this case, the main catch is valuation. Even after this dip, Rolls-Royce still trades on a punchy earnings multiple. In other words, the market expects a lot to go right. Any production issues, delayed engine deliveries, or earnings miss could see the price fall hard and stay down for a while.
And that’s not to mention rising oil prices, which could limit air travel and hurt engine sales.
Final thoughts
For longâterm investors, this 19% slide looks more like a bump in the road than the end of the story. The company is growing profits, returning more cash to shareholders, and benefiting from improving trends in travel, defence, and energy.
That said, investors who decide to buy are paying a premium price for a highâquality turnaround, one that could be derailed if oil prices remain sky high.
As always, any decision should be made with diversification in mind to smooth out volatility â particularly in today’s highly uncertain market environment.
The post Rolls-Royce shares down 19%. Why is this major broker still as bullish as ever? appeared first on The Motley Fool UK.
Should you invest £1,000 in Rolls-Royce Plc right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce Plc made the list?
More reading
- 3 risks to the Rolls-Royce share price?
- Will Rolls-Royce shares go up by 51% in the next year?
- Up 700% in 3 years, is Rolls-Royce a good pick for a Stocks and Shares ISA in 2026?
- See what £10k invested in volatile Rolls-Royce shares 1 month ago is worth todayâ¦
- I’ve just topped up my ISA! Here’s what I bought
Mark Hartley has positions in easyJet Plc. The Motley Fool UK has recommended Aj Bell Plc and 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.
