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- 1 Rolls-Royce Shares Near Record Highs Amid Defence Orders and Nuclear Partnerships
Rolls-Royce Holdings plc (LON: RR.) shares are trading around 1,102.5p on Thursday, 11 December 2025, reflecting a modest 0.3% dip as investors digest a wave of operational updates, new defence orders, nuclear partnerships, and broker forecasts. Despite the slight decline, the stock remains close to all-time highs, capping one of the most remarkable turnarounds in FTSE 100 history. In 2025 alone, Rolls-Royce shares are up over 80%, and over the last five years, the stock has surged more than 1,000%, transforming the engineering giant into a true blue-chip heavyweight.
- Last trade (LSE: RR.): 1,102.5p, down 3.5p (-0.32%)
- Market capitalisation: ~£92.6bn, more than double last year
- 2025 high: ~1,195p (September)
- 2025 start: ~600p (January)
Today’s minor decline is simply a consolidation following a spectacular multi-year rally that saw shares nearly double this year.
From Crisis to Comeback
Under CEO Tufan Erginbilgic, who took the helm in 2023, Rolls-Royce executed aggressive restructuring, cost-cutting, and portfolio optimisation. By mid-2025, shares had surged from roughly £1 in late 2022 to £11, positioning the company among the five largest FTSE 100 members by market value.
A critical moment came in July 2025, when Rolls-Royce raised its full-year guidance, lifting operating profit targets to £3.2bn and free cash flow to £3.1bn, triggering an 11% intraday jump and extending a 400% gain over two years. Subsequent updates reaffirmed these projections, underpinned by robust widebody engine demand, resilient defence revenues, and growing power-systems sales to data centres.
Balance Sheet Strength and Credit Upgrades
Rolls-Royce has also focused on financial health:
- Repaid a $1bn bond in October 2025
- Near completion of a £1bn share buyback, with ~£0.9bn executed by end-October
- S&P upgraded the credit rating to BBB+ (August)
- Moody’s upgraded to Baa1 with a positive outlook (November)
These measures, combined with strong cash generation, underpin the current elevated share price.
What’s Driving Today’s Price Action?
Consolidation Phase
After a 10–12% pullback from September highs, shares have stabilised around 1,100p, hovering near the 50-day moving average but comfortably above the 200-day, signaling long-term strength despite short-term resistance.
Operational News in December
Investors are digesting a flurry of announcements:
11 Dec: First emergency power generators delivered for data centres with Environmental Product Declarations
8 Dec: Major order for 300+ Leopard 2 tank engines
5 Dec: Strategic nuclear collaboration with Assystem, AtkinsRéalis, and Frazer-Nash for small modular reactors
Other updates: Hydrogen aviation projects, partnerships with AVK, and a Beijing MRO joint venture
These initiatives highlight Rolls-Royce’s evolution into a diversified power and propulsion company, spanning civil aerospace, defence, energy, and data-centre infrastructure.
Market commentary continues to emphasise the importance of deleveraging and buybacks, supporting investor confidence.
Analyst Ratings and Price Targets
Despite the massive rally, brokers remain optimistic:
- RBC Capital: Outperform, target 1,275p (~15% upside)
- Consensus survey: 12 “Buy” ratings, 5 “Hold,” 0 “Sell”; average target ~1,193p (~8% above current levels)
- Target range: 790p (cautious) to 1,440p (optimistic)
Forward P/E is in the low-30s, with a free cash flow yield of 4–5%, reflecting expectations for continued strong growth.
Bullish vs Cautious Outlook for 2026
Bullish case:
- Strong demand for civil aerospace engines, defence contracts, and data-centre power systems
- Potential growth from small modular reactors as a “second engine” beyond aviation
- Positive investment-grade ratings, ongoing buybacks, and possible dividend growth
Cautious case:
- Late November pullback raises questions about a potential trend reversal
- Risks: slowing air travel, defence budget pressures, and challenges in sustaining high margins
- Current premium valuations could compress if growth normalises
Most analysts foresee continued strength but at a more moderate pace, balancing optimism with caution.
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