Source: Sharecast
Barclays, which gave the stock a £1.10 target price, stated Rolls-Royce was "a consensual, overcrowded short" but said it sees a "value unlock" ahead, with risks skewed to the upside.
"In our view, negative widebody sentiment is troughing, given its late-cycle nature and slower pace of recovery relative to narrowbody, exacerbated further by extended and worsening China lockdowns," said Barclays.
However, Barclays also noted that airframers had recently offered positive widebody outlook commentary with the 787 to 10 per month by 2026, and upside risk to A350 volumes post 2025.
"We see positive catalysts ahead on the tailwind of engine flight hour recovery; a roughly 70%-correlated price/multiples driver, triggered by 2023 China reopen," said the bank.
Barclays also highlighted comments from Emirates' president, who said when Covid-restrictions in China are lifted, the country will "unleash demand, the likes of which we will not have seen for a long, long time".
Reporting by Iain Gilbert at Sharecast.com
