Few stocks have moved the needle quite like the Rolls-Royce (LSE:RR.) share price in recent years. Since Tufan Erginbilgiç took the reins as CEO in 2023, the engineering giant has surged an extraordinary 1,250%+! And even in the last 12 months, shares are up another 56.8%.
But could there be even more growth on the horizon?
What the analysts are saying
Right now, 20 analysts cover Rolls-Royce, and the consensus is firmly bullish. The average 12-month price target sits at 1,425p, with Deutsche Bank at 1,550p, RBC Capital at 1,600p, as some of the most bullish institutions tracking the business. One analyst has even placed a target as high as 1,740p.
Let me put those numbers into context. With the shares currently trading at around 1,400p, a £5,000 investment today could be worth as much as £6,214 by this time next year – a compelling potential outcome for any investor. And that’s before counting the extra gains from dividends.
Why the forecasts are so bullish
Unlike many popular stocks today, the optimism appears to be grounded in hard numbers, rather than fanciful hype. In 2025, Rolls-Royce delivered underlying operating profit of £3.46bn. That was a 40.5% year-on-year increase that comfortably smashed past analyst expectations. And at the same time, free cash flow also hit a staggering £3.27bn – more than double the amount of cash generated just two years earlier.
Skip ahead to 2026, and this trajectory appears to be accelerating. Management’s already guided for underlying operating profit of £4bn-£4.2bn, rising to as much as £5.2bn by 2028.
The Civil Aerospace division remains the primary growth engine for this enterprise, with long-term flying-hour contracts providing reliable, recurring cash generation. Meanwhile, the company’s expanding footprint in data centre power and defence is opening entirely new revenue streams.
With that in mind, it’s hardly surprising to see the Rolls-Royce share price continue to thrive. But can this momentum really continue?
The bear case
While there’s no denying that Rolls-Royce’s turnaround has been remarkable, there’s a valid argument that the share price might have gotten too far ahead of itself. And one team of analysts are actually predicting shares to stumble back down closer to 1,101p by June next year. That’s a 21% potential loss, enough to turn £5,000 into £3,950.
The core concern is valuation. At current prices, the stock trades on a forward price-to-earnings multiple well above the broader FTSE 100 average, meaning any disappointment in profit delivery or guidance could trigger a sharp reversal. And with supply chain pressures already starting to creep in across the business, the company does look vulnerable to having a spanner thrown into the works.
So where does that leave investors right now?
The bottom line
Rolls-Royce isn’t a cheap stock anymore. But to be fair, the firm’s exceptional profit growth, record share buybacks, and cash printing operations certainly justify a bit of a premium price tag.
With enough exposure to the aerospace sector already, I’m not tempted to add this stock to my portfolio right now. But if a more attractive entry price were to emerge, I might quickly change my mind.
Should you invest £5,000 in Rolls-Royce Plc right now?
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Zaven Boyrazian does not hold any positions in the companies mentioned.
