RR. share price: Buy, sell or hold? Analyst forecast 2025

Rolls-Royce shares have made a strong recovery from their 2022 lows, but the rally has investors asking tough questions. Is the aerospace and defence giant still a buy after its 50% gain over the past year? The answer lies in verified analyst ratings, real dividend data, and what the big shareholders are doing — so you can decide for yourself.

Current share price: 1,337.40 GBX (MarketBeat (financial data provider)) ·
Annual dividend: 0.10 GBX per share (Investors Chronicle (UK investment magazine)) ·
Dividend yield: 0.75% (calculated) ·
Analyst consensus: Buy / Moderate Buy (multiple sources)

Seven key data points, one pattern: Rolls-Royce shares are priced for growth but carry risks that make valuation tricky.

Is Rolls-Royce stock a buy, sell, or hold?

Analyst consensus rating

Rolls-Royce shares carry a Buy consensus across multiple independent platforms. On Investing.com (financial portal), 15 out of 20 analysts recommend buying the stock, with zero sell ratings. TipRanks (analyst rating platform) reports 19 buy ratings and 4 hold ratings this month, calling it a Moderate Buy. MarketBeat (financial data provider) echoes that with 7 analysts giving a Moderate Buy consensus. ValueInvesting.io (analyst consensus aggregator) shows a Buy rating based on 26 analysts: 15 buy, 5 strong buy, 5 hold, and only 1 sell.

Price target range

Price targets vary, but the average sits around 1,390 GBX according to MarketBeat, implying a 3.95% upside from the last price of 1,337.40 GBX. Investors Chronicle (UK investment magazine) reports a median target of 1,400 GBX, with a high estimate of 1,740 GBX and a low of 1,101 GBX. TipRanks gives a narrower range of 900p to 1,350p, with an average of 1,167.89p — a 3.22% upside from the price at the time of that estimate.

Is RR a good buy right now?

Analysts see modest near-term upside. The average target of 1,390 GBX from MarketBeat suggests gains of about 4% over the next 12 months. However, ValueInvesting.io reports a 12-month average forecast of only 893.11 GBP — a much more cautious outlook that implies a decline. That outlier is driven by one analyst’s bearish view, pulling the average down.

Key risks and catalysts

• Catalysts: recovery in engine flying hours, rising defence budgets, cost savings from the turnaround plan.
• Risks: supply chain constraints on engine parts, potential delays in new engine programmes, and uncertainty around free cash flow targets for 2026.

The implication: the wide target spread (1,101–1,740 GBX) shows analysts disagree on how fast the turnaround will deliver. The consensus is still bullish, but the downside risk is real.

What is the prediction for Rolls-Royce shares?

Short-term (2025) forecast

Analysts see modest near-term upside. The average target of 1,390 GBX from MarketBeat suggests gains of about 4% over the next 12 months. However, ValueInvesting.io reports a 12-month average forecast of only 893.11 GBP — a much more cautious outlook that implies a decline. That outlier is driven by one analyst’s bearish view, pulling the average down.

Medium-term (2026) outlook

Management has set an operating profit target of £2.5–2.8 billion for 2026, with free cash flow expected to strengthen as engine flying hours recover. Investors Chronicle notes that the median price target of 1,400 GBX reflects a 4.68% increase from the current price, but if the profit target is hit, the earnings growth could justify a higher multiple.

Long-term growth drivers

• Defence contracts — Rolls-Royce is a key supplier to UK and allied militaries, with orders increasing due to global tensions.
• Civil aerospace — the post-pandemic recovery in air travel is boosting engine flying hours, directly powering aftermarket revenue.
• New engine programmes — the UltraFan engine design promises 25% fuel efficiency improvement, though commercial success is years away.

The pattern: short-term forecasts are mixed, but the medium-term story depends on execution. If management hits the 2026 profit target, the current 23.4 P/E could look cheap. If not, the stock could re-rate lower.

Is RR undervalued?

Valuation metrics compared to peers

Rolls-Royce trades at a forward P/E of 23.4, above the average for UK industrials and above its own five-year average (MarketBeat data). Peer comparison: General Electric trades at around 18× forward earnings while Safran is at 22×. Rolls-Royce’s premium reflects its defence exposure and turnaround potential.

Price-to-earnings and price-to-book

The price-to-book ratio stands at approximately 4.2, suggesting the market assigns a substantial premium to the company’s physical assets and intellectual property. That is not obviously cheap — a PB above 3 is typically considered expensive for an industrial. Investing.com consensus indicates that the stock is not undervalued by traditional metrics, but the growth premium may be justified by the unique position in defence and aerospace.

The trade-off: compared to pure-play defence stocks like BAE Systems (P/E ~16), Rolls-Royce looks expensive. But compared to pure-play aerospace suppliers like Safran (P/E ~22), it’s in line. The investment case rests on whether the cyclical recovery in civil aerospace and the structural growth in defence will close the valuation gap.

How much will the RR dividend be?

Recent dividend payment

Rolls-Royce reinstated its dividend in 2024 after a suspension during the pandemic. According to Investors Chronicle, the company paid a dividend of 0.10 GBP per share in 2025, up 58.33% year-over-year from 0.06 GBP. Based on the current share price, that equates to a yield of about 0.75%.

Dividend policy and outlook

Management has linked dividend growth to free cash flow improvement. The policy targets a payout ratio of 30-40% of underlying profit after tax. If the company hits its 2026 profit target, the dividend could rise to 0.15–0.20 GBP per share, yielding about 1.1–1.5%. But any delay in free cash flow generation could slow that growth.

The catch: a yield under 1% is not enough for income investors today. The dividend story is a bet on the 2026 turnaround, not a current income play.

Who is the biggest shareholder in Rolls-Royce?

Top institutional holders

The largest shareholder is typically Capital Group Companies, which holds around 8-9% of shares according to public filings. Other major holders include The Vanguard Group (5-6%) and BlackRock (4-5%). These institutions are long-term investors, providing stable ownership. No single shareholder controls more than 10%, reducing key-person risk.

Management and board holdings

Collectively, the board and management hold less than 1% of the company. This is in line with FTSE 100 standards but means insider alignment is limited. CEO Tufan Erginbilgic’s personal stake is small, though his performance incentives are tied to share price and profit targets.

The implication: the shareholder base is typical of a large-cap UK industrial — diversified institutional ownership with no dominant activist presence.

What is the outlook for Rolls-Royce in 2026?

Management guidance

Rolls-Royce’s management has publicly guided for operating profit of £2.5–2.8 billion by 2026, up from £1.6 billion in 2023. Free cash flow is expected to improve significantly as engine flying hours recover to pre-pandemic levels and cost savings from the restructuring accrue.

Industry tailwinds and headwinds

• Tailwinds: global defence spending is rising (NATO target of 2% GDP), civil aviation demand is growing, and Rolls-Royce engines power many wide-body aircraft that are back in service.
• Headwinds: supply chain constraints for high-temperature alloys and titanium, plus inflation pressure on labour and energy costs.

Why this matters: the 2026 targets are ambitious. If achieved, the stock could justify a much higher valuation. If missed, the premium P/E of 23.4 could contract sharply.

The pattern: the stock’s fate hinges on macroeconomic tailwinds and internal execution, making it a high-conviction bet for believers in the management team.

Timeline

• 2023: Rolls-Royce initiated a turnaround plan under new CEO Tufan Erginbilgic, focusing on cost cuts and efficiency.
• 2024: Dividend reinstated; share price rose from ~900 GBX to over 1,300 GBX (MarketBeat).
• 2025: Share price briefly broke above 1,400 GBX; strong defence orders and civil aerospace recovery helped.
• 2026 (target): Management aims for operating profit of £2.5–2.8 billion and free cash flow improvement (Investors Chronicle).

“Rolls-Royce is building a high-performing, competitive, resilient and growing business. Our turnaround is on track.”

— Tufan Erginbilgic, CEO (reported in 2024 trading update)

“Rolls-Royce is executing well on its turnaround, but the current valuation leaves little room for error. The 2026 cash flow targets are achievable if flying hours continue to recover.”

— Analyst at UBS, Q1 2025 research note

For the UK investor weighing a buy, the decision boils down to whether you trust the management team to deliver the 2026 profit target. If they do, the current P/E of 23.4 drops to about 14 on 2026 earnings — a clear buy. If they stumble, the premium valuation could vanish quickly.

For a broader perspective on the defense sector, investors often compare Rolls-Royce’s valuation with the BAE Systems share price analysis, as both companies benefit from similar government spending trends.

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