London, 8 December 2025 — Rolls-Royce Holdings PLC (LON: RR.) remains one of the most closely watched stocks in the FTSE 100 after a spectacular multi‑year turnaround. As of this morning, the shares trade around 1,084.5p, giving the group a market capitalisation of roughly £90–91bn and sitting about 9% below their 2025 high of 1,195p set in September. [1]
Over the past year, Rolls-Royce has morphed from a post‑pandemic recovery story into a fully‑fledged momentum stock: the share price is up more than 80% year‑to‑date in 2025 and over 1,000–1,400% in the last three years, depending on the starting point used. [2] The question on 8 December 2025 is no longer whether the turnaround has worked — it clearly has — but whether there is still enough fuel in the tank for further gains.
Rolls-Royce share price today: a rally taking a breather
Recent price data show Rolls-Royce consolidating after its record run:
- The stock last closed at 1,084.5p on 5 December, down 0.6% on the day. [3]
- The 52‑week range now spans 557p to 1,195p, underlining just how dramatic the re‑rating has been. [4]
- On a three‑year view, analysts at Tikr estimate the shares have climbed around 1,400% as the business moved from crisis mode to strong free‑cash‑flow generation. [5]
That surge has inevitably triggered a valuation debate. Some commentators argue that Rolls-Royce has become one of the FTSE 100’s most expensive industrials after a >700% multi‑year climb, questioning whether the stock has run too far, too fast. [6] Others note that, even after the rally, earnings, margins and cash flow are still catching up with the share price — and in some cases may justify further upside.
Latest company news: nuclear partnerships, power deals and civil aerospace momentum
Nuclear collaboration and emergency power partnership
In the days leading up to 8 December, Rolls-Royce has announced a string of strategically important deals:
- 5 December 2025 – The company signed a strategic collaboration partnership with Assystem, AtkinsRéalis and Frazer‑Nash to support its nuclear growth ambitions. [7]
- The agreement is designed to deepen engineering and project‑delivery capability across Rolls-Royce’s nuclear portfolio, which includes conventional defence nuclear work and its fast‑growing Small Modular Reactor (SMR) business.
- 4 December 2025 – Rolls-Royce and AVK extended their partnership, guaranteeing five years of capacity for emergency power generators, a key part of the group’s Power Systems segment serving data centres and mission‑critical infrastructure. [8]
These announcements reinforce two of the main equity stories around Rolls-Royce today: nuclear as a long‑dated structural growth option and high‑margin generator sets tied to data‑centre and grid‑reliability demand.
Civil aerospace: Dubai Air Show and new airline deals
November also brought a heavy stream of civil aerospace news via Rolls-Royce’s own press office: [9]
- At Dubai Air Show 2025, repeat business dominated, with agreements covering 176 engines, highlighting the stickiness of Rolls-Royce’s installed base in widebody aircraft.
- Emirates agreed to join Rolls-Royce’s global MRO (maintenance, repair and overhaul) network from 2027, deepening a core relationship in long‑haul aviation.
- The company welcomed an MoU from Air Europa for up to 40 Trent‑powered aircraft, added AviLease to its new LessorCare+ offering, and announced new commitments from Etihad.
Taken together, these deals point to robust long‑term demand for Rolls-Royce’s Trent engine family and associated aftermarket services, the latter being the main driver of profit and cash flow in Civil Aerospace.
Financial performance and 2025 guidance: transformation on track
Half‑year 2025 results: profit, cash and dividends
In its half‑year 2025 results published on 31 July, Rolls-Royce reported a dramatic step‑up in performance: [10]
- Underlying operating profit rose 50% year‑on‑year to £1.7bn, with a 19.1% margin.
- Free cash flow reached £1.6bn, supported by strong aftermarket activity and long‑term service agreement (LTSA) cash inflows.
- Net cash improved to £1.1bn by 30 June 2025, with a robust liquidity position of £8.5bn.
- Management raised full‑year 2025 guidance for underlying operating profit to £3.1–3.2bn and free cash flow to £3.0–3.1bn, and announced an interim dividend of 4.5p per share, the first dividend since 2019, alongside a £1bn share buyback. [11]
The step‑change reflects margin expansion across all three main segments — Civil Aerospace, Defence and Power Systems — as well as rigorous cost controls and better pricing.
November 2025 trading update: guidance reaffirmed and buyback progress
A trading update to 31 October 2025, released on 13 November, confirmed that full‑year guidance remains on track: [12]
- Rolls-Royce reiterated its 2025 targets of £3.1–3.2bn underlying operating profit and £3.0–3.1bn free cash flow, despite ongoing supply‑chain challenges.
- Large‑engine flying hours in Civil Aerospace reached 109% of 2019 levels over the first ten months of the year, thanks to orders from IndiGo, Malaysia Airlines, Avolon and others, plus rising demand for the Trent XWB‑97‑powered Airbus A350F.
- Defence momentum remained strong, helped by the Global Combat Air Programme (GCAP) and an agreement to power 20 Eurofighter Typhoons for Türkiye with EJ200 engines.
- Power Systems continued to benefit from data‑centre and governmental demand, including progress on a next‑generation engine and a fast‑start gas generator for data centres.
- The company had completed £0.9bn of its £1bn 2025 share buyback by the end of October and highlighted an S&P Global credit‑rating upgrade to BBB+, underlining its restored balance‑sheet strength.
For equity investors, the trading update was crucial: it signalled that the underlying business is still catching up with the share price, not the other way around.
Rolls-Royce stock forecast 2025–2026: what analysts are saying
Across major brokers and data providers, analyst sentiment towards Rolls-Royce remains broadly positive going into 2026.
Consensus ratings and price targets
- Investing.com’s consensus shows 13 Buy, 5 Hold and 0 Sell ratings, giving Rolls-Royce an overall “Buy” recommendation. [13]
- The same dataset puts the average 12‑month price target at about 1,207p, with a high near 1,615p and a low around 790p. [14]
- MarketBeat tracks an average target of 1,161.5p from six analysts, implying around 7% upside from the recent 1,084.5p close. [15]
- eToro cites a slightly higher average price target of roughly 1,255p, suggesting mid‑teens percentage upside from current levels. [16]
Taken together, most published targets cluster in the 1,160–1,260p range, implying high‑single‑ to low‑teens upside over the next 12 months, with some outliers significantly higher.
RBC Capital’s new “Outperform” call
A notable development in November was RBC Capital Markets initiating coverage of Rolls-Royce with an “Outperform” rating and a price target of 1,275p per share, implying about 18% upside from around 1,095p at the time of the note. [17]
RBC’s thesis centres on:
- A fundamentally different, more cash‑generative Rolls-Royce than the one investors faced pre‑pandemic.
- The widebody civil engine portfolio accounting for roughly 70% of group value despite contributing about 37% of sales. [18]
- A projected 2026 free‑cash‑flow yield of c. 4.4%, versus a peer average around 3.2%. [19]
- Additional optionality from the UltraFan next‑generation engine and SMR (Small Modular Reactor) opportunities. [20]
Several other banks, including Morgan Stanley, Deutsche Bank and JPMorgan, have also raised targets through 2025 as earnings and cash flow have surprised to the upside. [21]
US ADRs: RYCEY and RYCEF
For US investors, Rolls-Royce trades via OTC tickers RYCEY and RYCEF:
- RYCEY recently traded around $14.5, with a 52‑week range of $6.8–16.27. [22]
- StockInvest and others show modest near‑term volatility but a positive trend over recent weeks. [23]
- RBC has also initiated coverage on RYCEF with a Buy rating and a $16.74 target, implying high‑teens to low‑20s upside from recent levels. [24]
Technical outlook for December 2025: consolidation after a record run
From a technical perspective, the picture is more nuanced than the fundamental story.
A December 2025 technical review by Invezz, carried on TradingView News, highlights that: [25]
- Rolls-Royce has pulled back from its 1,195p year‑to‑date high to around 1,040–1,085p, leaving the price near its lowest level since August.
- The chart shows a double‑top pattern around the 1,195p region and the price has slipped below prior support at 1,090p, as well as the 50‑day exponential moving average.
- Momentum indicators such as RSI and PPO have rolled over, with the RSI edging closer to oversold territory.
The analysis suggests a short‑term base case in which sellers may test the 1,000p level. A decisive break below that support would point to further downside, while a recovery back above 1,090p could invalidate the bearish pattern and reopen the path towards the highs. [26]
Other commentaries have framed the recent 10% pullback from the highs as an opportunity to “buy the dip”, arguing that nothing material has changed in the fundamental story and that sentiment, not earnings, is driving the correction. [27]
Core drivers of the Rolls-Royce investment case
1. Civil Aerospace: widebody recovery and time‑on‑wing improvements
Civil Aerospace remains the heart of the equity story:
- Large‑engine flying hours are now above 2019 levels, a crucial milestone for long‑term service revenues. [28]
- Margins in Civil Aerospace reached nearly 25% in H1 2025, up sharply year‑on‑year, driven by richer aftermarket mix and better contract economics. [29]
- Rolls-Royce has systematically renegotiated legacy loss‑making contracts and is extending time‑on‑wing across its Trent fleet, cutting maintenance costs for both customers and itself. [30]
If long‑haul demand remains resilient and Rolls-Royce sustains its improved reliability metrics, Civil Aerospace could continue to compound earnings and cash flow well into the next decade.
2. Defence: GCAP, Eurofighter and US nuclear microreactors
Defence provides diversification and visibility:
- The Global Combat Air Programme is progressing, with Rolls-Royce leading power and propulsion for the future fighter programme. [31]
- The UK’s agreement to export 20 Eurofighter Typhoons to Türkiye, powered by EJ200 engines, underpins future Defence revenues. [32]
- Rolls-Royce’s role in the US Project Pele microreactor adds another nuclear‑linked growth option in military applications. [33]
With defence budgets rising in Europe and continued demand from the US, this segment supports resilient cash generation across the cycle.
3. Power Systems: data centres and the AI infrastructure boom
The Power Systems division (MTU engines and related solutions) is increasingly framed as an AI infrastructure play:
- Rolls-Royce reports strong order growth from data‑centre customers and governments, with power‑generation revenue expected to grow around 20% annually towards the mid‑term. [34]
- The group is investing in a next‑generation engine for data‑centre backup power, due to enter service in 2028, promising higher power density and lower emissions. [35]
- The recently launched fast‑start gas generator, available from 2026, targets data centres awaiting grid connection — a direct link to AI‑driven demand for compute capacity. [36]
The AVK partnership announced on 4 December reinforces Rolls-Royce’s ability to supply this market with emergency power generators over the medium term. [37]
4. Small Modular Reactors (SMRs) and new markets
Rolls-Royce’s SMR unit is still pre‑revenue but increasingly central to the long‑term narrative:
- The business has advanced to the final stage of Sweden’s competition to select a nuclear technology partner and was earlier chosen by Great British Energy – Nuclear as the preferred technology in the UK. [38]
- Rolls-Royce SMR has also entered the US regulatory process, positioning it to compete with names like NuScale and Oklo in North America. [39]
- Management expects the SMR business to be profitable and free‑cash‑flow positive by 2030. [40]
If SMRs achieve commercial traction, the equity upside could be substantial — but investors need to balance that potential against regulatory risk and long lead times.
Valuation and risk: has the share price gone too far?
After such a dramatic rerating, valuation is the core bear argument.
- Some DCF‑based analyses suggest Rolls-Royce may now trade 20% or more above certain intrinsic‑value estimates, depending on the assumptions used. [41]
- Commentators at outlets like The Motley Fool and Yahoo Finance have questioned whether the stock has become one of the “greatest rip‑offs” in the FTSE 100, given the multiple expansion relative to peers. [42]
Key risks commonly flagged include:
- Cyclical exposure
- Civil Aerospace and Power Systems are sensitive to global air‑traffic trends, capital‑spending cycles and, increasingly, data‑centre growth. A slowdown in travel or AI infrastructure could hurt earnings.
- Execution risk on SMRs and UltraFan
- Both are capital‑intensive programmes with long timelines. Technical setbacks, cost overruns or regulatory delays could dilute returns.
- Geopolitical and regulatory risk
- Defence contracts and nuclear projects depend on stable policy frameworks and can be vulnerable to shifting political priorities.
- Valuation compression
- If earnings merely meet, rather than beat, elevated expectations, the stock could derate even without an operational misstep.
On the other hand, bullish analysis pointing to strong free‑cash‑flow growth, improved balance‑sheet quality and disciplined capital returns argues that a premium multiple is justified versus the Rolls-Royce of the past. [43]
Is Rolls-Royce stock still a buy after its 2025 surge?
As of 8 December 2025, three broad views dominate the market debate:
- The momentum view: Rolls-Royce is a classic turnaround stock entering its “compounding” phase. With guidance intact, free cash flow rising and credit ratings upgraded, the recent pullback is seen as a healthy pause in a longer uptrend. This camp leans on RBC and other bullish brokers, plus “buy‑the‑dip” analyses that focus on unchanged fundamentals. [44]
- The cautious fundamentalist view: The structural story is attractive, but much of it is now in the price. Civil Aerospace is already above pre‑pandemic flying hours, the data‑centre theme is well understood, and SMR upside is speculative. Here, investors see limited upside versus consensus targets and prefer to wait for either a deeper pullback or new, concrete growth catalysts.
- The skeptic view: The share price has moved too far ahead of fundamentals. Critics note that industrial turnarounds often overshoot, and that any disappointment on 2026–27 margins or cash flow could drive a sharp de‑rating, especially if macro conditions deteriorate. [45]
Where these views converge is on one point: this is no longer the distressed Rolls-Royce of 2020–2021. The company now boasts investment‑grade credit ratings, rapidly improving margins, resumed dividends and a substantial share‑buyback programme — all underpinned by strong demand in civil aviation, defence and mission‑critical power. [46]
For investors assessing Rolls-Royce on 8 December 2025, the decision largely comes down to risk tolerance and time horizon:
- Over the next 12 months, consensus targets suggest modest further upside from current levels, but with elevated volatility as the market digests a huge multi‑year rally.
- Over the longer term, the combination of high‑margin engine services, growing defence demand, data‑centre exposure and potential SMR upside could justify today’s valuation — if execution remains strong and cash generation continues to improve.
References
1. www.davy.ie, 2. uk.finance.yahoo.com, 3. www.investing.com, 4. www.investing.com, 5. www.tikr.com, 6. uk.finance.yahoo.com, 7. www.rolls-royce.com, 8. www.rolls-royce.com, 9. www.rolls-royce.com, 10. www.rolls-royce.com, 11. www.rolls-royce.com, 12. www.investegate.co.uk, 13. www.investing.com, 14. www.investing.com, 15. www.marketbeat.com, 16. www.etoro.com, 17. www.investing.com, 18. www.investing.com, 19. www.investing.com, 20. www.investing.com, 21. www.marketbeat.com, 22. finance.yahoo.com, 23. stockinvest.us, 24. news.futunn.com, 25. www.tradingview.com, 26. www.tradingview.com, 27. seekingalpha.com, 28. www.investegate.co.uk, 29. www.rolls-royce.com, 30. www.rolls-royce.com, 31. www.investegate.co.uk, 32. www.investegate.co.uk, 33. www.investegate.co.uk, 34. www.rolls-royce.com, 35. www.investegate.co.uk, 36. www.investegate.co.uk, 37. www.rolls-royce.com, 38. www.investegate.co.uk, 39. www.investegate.co.uk, 40. www.rolls-royce.com, 41. www.webull.com, 42. uk.finance.yahoo.com, 43. www.tikr.com, 44. www.investing.com, 45. www.webull.com, 46. www.investegate.co.uk
