Rolls Royce share price has been among the strongest performers in UK’s FTSE 100 index in recent months. The RR stock has gained more than 14% in the year-to-date but is down 8% over the last 12 months. Over the past five years, the stock has lost more than 60% in value. Its total market capitalization currently stands at £9 billion.
Is RR a Good Turnaround Stock?
Rolls Royce share price has staged a strong comeback since the start of the year, jumping more than 67% from its lowest point in September last year. Despite this, analysts seem uncertain about the stock’s performance in the future. The company’s shares have changed hands for pennies each at some point in each of the last three years.
The stock market has not been responding well to the new CEO’s blunt description of the challenges faced by Rolls Royce Holdings Plc since he took up the job last month. Recently, RR’s new CEO Tufan Erginbilgic told the company’s workers that the British aerospace and defence company was feverish and that it needed to make drastic changes to survive.
Rolls Royce has been facing several challenges in recent years. Civil aviation, its bread and butter, which accounts for more than 40% of its total revenue, has been experiencing a lagged recovery despite the broad recovery in the aviation sector.
RR stock price has been doing well for the past three months on the back of China’s reopening to international travel and strong recovery in the demand for air travel. Analysts have linked RR’s recent slips to the new CEO’s worried tone.
Rolls Royce Share Price Forecast
Rolls Royce share price has been stalling for the past few days, as seen on the daily chart. At the time of writing, the stock was trading 0.11% higher at 108.84p. It is moving slightly above the 25-day and 50-day moving averages, while its RSI has slipped below the overbought region.
Therefore, the RR stock price is likely to fall in the medium term as sellers target the support level at 100.10p. On the flip side, a move past the resistance level at 115.08p will invalidate my bearish thesis.