Rolls-Royce worth £50bn again after FTSE 100 surge

Rolls-Royce has returned to a market capitalisation of more than £50bn after its shares rallied.

The Derby-headquartered FTSE 100 giant passed the milestone for the first time at the start of December 2024 before its share price fell back .

However, Rolls-Royce has surpassed the £50bn barrier once again after a jump in its share price in recent days.

The rise coincides with the news reported at the end of last week that the FTSE 100 had hit a new all-time high as investors ramp up their bets on an interest rate cut by the Bank of England next month.

City AM reported on 17 January that the value of London’s 100 largest listed companies has grown 3.2 per cent in the last week amid a flurry of disappointing economic data, which has raised the likelihood the Bank of England will cut interest rates more aggressively than expected.

The FTSE 100’s previous all-time high was reached earlier this year, on 15 May, reaching an intra-day high of 8,474.71.

However on Friday it reached a new intra-day high of 8,514.79, growing 1.4 per cent throughout the morning in a steady climb.

The news came after a combination of better-than-expected inflation data on Tuesday and more signs that the UK economy was stagnating.

Earlier this month , it was also reported that a City broker is expecting Rolls-Royce to keep leading the FTSE 100 in share price growth.

Panmure Liberum analyst Nick Cunningham argued that Rolls-Royce’s shares could still increase by more than 40 per cent over the next three years.

The firm’s share price has risen six-fold in the last two years and was the best performer in the FTSE 100 in 2024, thanks to a dramatic improvement in financial performance for the company.

Panmure Liberum forecast that the company’s share price will fall slightly from 567p to 550p over the next year but rise rapidly to 820p in the next three years, up from 400p and 665p respectively.

The analysts credited these predictions partially to a continued rise in civil aviation, which has allowed Rolls-Royce’s cash flow to keep climbing.

Rolls-Royce’s shares dipped at the start of January after analysts at investment bank Citi downgraded the stock.

The analysts downgraded the FTSE 100 giant from a ‘buy’ to a ‘neutral’ rating while increasing the price target from 555p to 641p.

In November 2024, Rolls-Royce held full-year guidance as the engineering giant continued to benefit from soaring demand for its aircraft engines and increased defence spending.

In a trading update , the FTSE 100 firm said it expected underlying operating profit of between £2.1bn to £2.3bn in the current year and free cash flow of £2.1bn to £2.2bn, unchanged from a prior forecast in August.

It flagged continuing strong demand in Civil Aerospace, where large engine flying hours grew by 18 per cent year-on-year to 102 per cent, surpassing the levels seen before the pandemic wiped out passenger numbers.