The Rolls-Royce share price was in November, surging by 16 per cent. Today, the bullish trend looks to be resuming, with the early hours of the trading session showing the company’s share price rising by more than a percentage point and intraday data on lower timeframes showing a significant change to the upside from yesterday’s 4 per cent drop.
The recovery of the aviation industry, which makes up most of Rolls-Royce’s profits through servicing and upkeep of flight engines, saw the company sign multiple multi-year deals with aviation players such as the China Eastern Airline and the Malaysian Aviation Group. The result of these deals played a significant role in the company’s share price surge throughout November.
The company was also pushing for the UK government to enter into formal negotiations over their plans to build small nuclear plants that would address the current energy crisis in the UK. the deal, which data shows could be as high as £2.5 billion, also partly contributed to the price surge as investors’ sentiments about future cash flows and investment risks continued to be positive, and partly contributing to gains seen in November.
In December, the company has also started on a strong footing by testing a hydrogen jet engine in partnership with EasyJet. According to reports, the hydrogen used in the test was also produced using environmentally friendly tidal and wind power. These tests are likely to have an impact on the company’s share performance for the next few trading session, as seen today, with price pushing to the upside.
Therefore, based on the fundamental analysis above, I expect Rolls-Royce’s share price to continue going up for the next few trading sessions. There is a high likelihood that we might see the company’s price trading above the 94p supply level in the next few weeks and possibly pushing above the 100p price level by the end of the year. However, a drop below 85p will invalidate my bullish outlook.
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