Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Rolls Royce's shares post record week on capital raising push

Published 10/09/2020, 08:51 AM
Updated 10/09/2020, 08:55 AM
© Reuters. FILE PHOTO: A man looks at Rolls Royce's Trent Engine displayed at the Singapore Airshow in Singapore

© Reuters. FILE PHOTO: A man looks at Rolls Royce's Trent Engine displayed at the Singapore Airshow in Singapore

By Joice Alves

LONDON (Reuters) - Rolls Royce (L:RR) shares on Friday were heading for their best weekly gain since listing in 1987 as the British aircraft engine maker's plan to raise money to cope with the coronavirus travel crisis triggered bargain hunting among investors.

The value of Rolls Royce shares more than doubled in the last week to 228.90 pence, although that is still a far cry from the 690 pence they traded at before the coronavirus outbreak.

The company aims to raise a total of 5 billion pounds, including 2 billion from shareholders, to cope with a "worst case scenario".

"(The recapitalisation plan) sets up Rolls-Royce (OTC:RYCEY) sufficiently to navigate an uncertain recovery and removes any lingering concerns about liquidity - and even solvency," said Berenberg analyst Andrew Gollan, keeping a "buy" rating on the stock.

Worries over a long-haul travel slump reduced Rolls Royce's market value to just 3.8 billion pounds ($4.9 billion) from 20.5 billion pounds two years back.

"There is a clear willingness to go bargain hunting as traders begin to see the light at the end of the tunnel," said Joshua Mahony, senior market analyst at IG.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown (LON:HRGV) said there has been "renewed retail investor interest" with Rolls Royce shares the most purchased by her clients in the week ending Oct. 8.

The Capital Group of Companies, a major investor, raised its stake in Rolls to 8.70% from 7.91% on Thursday.

Rolls Royce shares were up 17.8% on Friday by 1136 GMT, among the top performers on the pan-European STOXX 600 (STOXX) index. Analysts said the stock still looked cheap.

© Reuters. FILE PHOTO: A man looks at Rolls Royce's Trent Engine displayed at the Singapore Airshow in Singapore

($1 = 0.7723 pounds)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.