Rolls-Royce Share Price Surge By 22% On £652 Million Profit

Summary:
• Rolls-Royce share (LON: RR) has surged by more than 22% in the past four days.
• The company's underlying profit for 2022 beat expectations by 36%.
• Roll Royce profit also increased by 57% increase from the previous year.

Rolls-Royce share price (LON: RR) has surged as the company’s latest financials have beaten expectations. After a bullish start to the year, Rolls Royce shares were trading sideways before the news orchestrated a massive breakout. On Tuesday, the stock of the aviation giant started with a correction and is trading 0.94% lower than yesterday.

Why Are Rolls Royce Shares Surging?

According to a Reuters poll, analysts were expecting Rolls Royce to post a profit of around £478 million. However, the actual numbers exceeded this expectation by 36% as the company announced a £652 million underlying profit. This was also a 57% increase from the firm’s 2021 profit.

The increase in profit is no surprise as the global traveling restrictions have been almost completely lifted. Many airlines have also reported an increase in profits. International Airline Group (IAG) also posted an operating profit of 1.3 bn euros and expecting an increase this year.

Rolls-Royce share price reacted very positively to the news and soared to 144p, the highest level in 15 months. On Tuesday, the price is expected to show some volatility as it approaches a key resistance. Till press time, LON: RR has generated more than 53% returns since the start of the year.

Rolls-Royce Share Forecast

On the daily chart, Rolls Royce stock has broken out of the ascending channel. Although such channels tend to break more to the downside, the news made it go against all odds. A closer look at the chart reveals a few critical levels that come from confluences.

The 146p-150p level has proven to be strong resistance for LON: RR. The price has retested this level multiple times in the past 3 years but failed to break out. These retests occurred in 2020 and 2021. This will be the most critical level for the bulls to claim. If the price breaks this level, then Rolls-Royce share price prediction will become extremely bullish.

In such a scenario, I expect the price to surge toward the 168p-200p level. However, this won’t be easy in the ongoing high-interest rate environment. Considering the macroeconomics, there is more chance of a pullback from the current level than a potential upside.