Rolls-Royce Share Price Forecast: I am Worried

The Rolls-Royce share price has struggled to find direction in the past few days as investors wait for the appointment of the new Chief Executive. The heavily-traded RR stock is trading at 98.6p, a few points above last month’s low of 82.92p. This price is also about 34% below its highest point in 2021.

Rolls Royce CEO hunt

Rolls-Royce Holdings has been in the spotlight recently as investors assess the impact of the crisis in Ukraine on the company. While RR has minimal presence in Russia, its business has been exposed because of the vast amount of titanium it buys from the country. In addition, the crisis has also led to a sharp increase in the price of key products like steel and aluminium that the company uses widely. As a result, investors expect that the firm’s business will see thinner margins this year. 

Rolls-Royce share price has also been in a tight range as the company searches for a new Chief Executive as Warren East exit. He announced that he will step down later this year for personal reasons. As a result, the firm has hired MWM Consulting to find a successor to the CEO. According to the Financial Times, some of the biggest shareholders will press the new CEO to continue with Warren’s strategy, which includes cost-cutting, electric aircraft, and mini nuclear reactors. 

Another key catalyst for the Rolls-Royce share price is the rising increase in defence spending. Countries like Australia, Germany, and the US have all announced that they will boost their spending on defence. As one of the leading companies in the industry, Rolls-Royce is expected to benefit. 

Some analysts expect that Tony Wood, the current CEO of Meggitt, could become the next CEO of the company. Meggitt is an industrial company that is being acquired by a group of US private equity firms. At Meggitt, he has transitioned the company from a small industrial player to one of the most attractive firms in the FTSE 100. If appointed, he will need to continue cutting costs, improving efficiency, and returning the company to manufacturing small engines for single-aisle aircraft. 

Rolls-Royce share price forecast 

A quick look at the daily chart shows that the RR share price is not in a good place. The stock has formed what looks like an inverted cup and handle pattern whose lower side is at 87p. In price action analysis, this pattern is usually a bearish sign. Indeed, the shares seem to be forming the handle section of this pattern. It also remains below the 50-day moving average. It has also formed a head and shoulders pattern. 

Therefore, there is a likelihood that the stock will soon have a bearish breakout. If this happens, watch’s next key reference level will be at 65p, which was the lowest level on 29th October 2020.

Rolls-Royce share price