Rolls-Royce Share Price Forecast Amid Upbeat Airline Earnings

The Rolls-Royce share price has been in a steady upward trend in the past few days as investors focus on its small nuclear plants. The RR shares are also crawling back as the market reacts to the ongoing earnings season. The stock is trading at 95.43p, which is about 8.43% above the lowest level this week. However, it remains substantially below the year-to-date high of 151p.

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Airline earnings

The Rolls Royce share price has done well as most investors focus on the recent earnings by some of the leading airlines. For example, last week, Delta Airlines said that its business was seeing substantial demand worldwide. 

And on Wednesday, United Airlines said that it expects to make a profit this year as demand for flying continues. The company’s revenue rose to $7.57 billion, while its earnings per share rose to $4.24.Like the Delta CEO, he sounded optimistic about the sector, saying:

I’ve never seen in my career, and I’ve been in this industry a long time … such a hockey-stick increase of demand,”

Other airlines have also been upbeat about the industry. They include regional firms like EasyJet and Ryanair and other firms like Emirates and Etihad. Therefore, these are positive signs for Rolls-Royce, a company that makes most of its money servicing jet engines. Therefore, more flying hours will lead to better results this year.

The company is also benefiting from the positive sentiment concerning its nuclear power business. It expects that it will receive certifications for these reactors in the next two years. It has already started building some of the components. However, the biggest challenge facing Rolls Royce is that the company is seeing higher cost of doing business as the price of most commodities, especially uranium, remains at elevated levels.

Rolls-Royce share price forecast

In my last RR share price forecast, I warned that the stock could plunge in the next few weeks. My prediction has not played out as I expected since the shares have tilted upwards. The stock remains slightly above the important support level at 86.73p, which was the lowest level on July 20th. 

The stock has moved below the 25-day and 50-day moving averages, while the Relative Strength Index (RSI) has moved to the neutral level of 50. In my view, the bearish trend is still intact, with the next key support level being at 86.73p. A move above the resistance at 100p will invalidate this view.