Rolls Royce share price rose to all-time highs of GBX 746 on Thursday, up by 18% on the daily chart at the time of writing. The sharp spike was driven by strong earnings results for the quarter ended December 2024, which beat analysts’ forecasts. Also, the company announced dividends for the first time in five years, and announced a £1 billion share buyback program.
The company proposed a 6 pence per share dividend, translating to a total of £1.5 billion to be paid back to shareholders. Rolls Royce’s revenues for Q4 2024 rose to £17.8 billion, with underlying profits rising by 55% to £2.5 billion, well above the forecast range of £2.1 billion-£2.3 billion.
Strong Tailwinds on Rolls Royce Share Price
The strong results have seen the Rolce Royce (LSE: RR.) raise its guidance, adjusting its target for operating profit to between £3.6 billion-£3.9 billion by 2028. In addition, it projects to earn between £4.2 billion-£4.5 billion in free cash flow by that time.
Rolls Royce share price upside is supported by the recovery in civil aviation travel in the post-pandemic era and strong demand for its products in the military defence segment as geopolitical risks rise. For instance, the UK Government has announced this week that it is raising defence spending to 2.5% of GDP.
Also, there has been an uptick in the demand for Small Modular Reactors (SMR), an emerging nuclear power segment in which Rolls Royce is a market leader. This has resulted in a strong order book, which will likely keep Rolls Royce share price on the growth path.
Rolls Royce Share Price Prediction
The momentum on Rolls Royce share price calls for further upside above the pivot point at GBX 731. Immediate resistance will likely be at GBX 762, but a strong momentum will break above that level and potentially encounter the second resistance at GBX 772.
Conversely, the momentum will shift to the downside if the stock breaks below GBX 731. That will likely see the first support established at GBX 717. Breaking below that level will invalidate the upside narrative. In addition, such momentum could extend gains to test the next support at GBX 700.
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