(Sharecast News) - Rolls-Royce rallied on Wednesday as JPMorgan Cazenove upgraded shares of the engine maker to 'neutral' from 'underweight', highlighting four reasons behind the change, despite "major challenges".
JPM said the approval of multiple vaccines means many investors are willing to value the stock on its medium-term ambitions.
In addition, it noted the shares are now rising despite bad news such as the recent cash flow warnings in December and January and the large 2020 earnings miss.
"Whilst international airline capacity is still down circa 75% versus 2019, it is unlikely to get worse and so the direction of travel will most probably be one of slow improvement," JPM said. "RR's shares have significantly underperformed peers since 2018 and this is attracting investors."
The bank hiked its price target on the shares to 105p from 45p.
At 0920 GMT, the shares were up 3.8% at 127.57p.
Rolls-Royce (RR.)23 May 2024 16:46
London close: Stocks slip on UK election, US jobless claims
(Sharecast News) - London stocks ended lower on Thursday, mirroring Wall Street's decline as jobless claims in the US fell more than anticipated.
