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Investing.com - Goldman Sachs initiated coverage on Rolls-Royce Holdings Plc. (LON:RR) (OTC:RYCEY) with a Buy rating and a price target of GBP12.90, citing the company’s successful operational turnaround.
The investment bank highlighted that Rolls-Royce has executed a "compelling operational turnaround" over the past three years, transforming into a leaner, more cash-generative business with a strong balance sheet and reinstated dividend.
Goldman Sachs noted that while much of this progress is already reflected in the share price, it sees additional upside potential from several factors including time on wing improvements, mix shift in long-term service agreements pricing, and high growth in Power Systems.
The bank projects Rolls-Royce will reach approximately £4.9 billion of free cash flow in fiscal year 2028, exceeding the company’s own guidance of £4.2-4.5 billion.
The 12-month price target implies approximately 14% upside potential and represents a 28x 12-month forward EV/EBIT multiple, according to Goldman Sachs.
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