Bank of America Lifts Rolls-Royce Price Target to 1,740p

Bank of America has set a fresh Rolls-Royce price target of 1,740p, reiterating its Buy rating on the aerospace and defence group and implying 24% upside from the closing price on 22 June. The call is grounded not in nuclear ambitions or defence premiums, but in something rather more prosaic: jet engine flying hours.

What Sits Behind the Rolls-Royce Price Target

Bank of America’s research note pointed to large engine flying hours running at approximately 115% of full-year 2019 levels in the first quarter of 2026. A softer March was followed by sequential improvement through April and May. The bank’s note read: ‘April and May have sequentially improved versus March.’ That momentum, sustained through a period of Middle East turbulence that grounded some competing fleet capacity, is the core of the BoA investment case.

The longer data series supports the reading. Rolls-Royce’s official RNS trading update to 31 October 2025 recorded large engine flying hours growing 8% year on year to 109% of 2019 levels over the 10 months to that date. The trajectory has continued upward since.

Berenberg sits alongside BoA in its optimism on the flying-hours story, though with a more conservative price target of 1,430p. Its research note described Rolls-Royce’s engine fleet as ‘best-in-class’ and youngest among major suppliers when adjusted for capacity, and revised its large-engine flying-hours growth forecast for 2026 up by 1 percentage point to 6%, citing ‘the strong recovery since the US-Iran conflict began.’ Rolls engines hold the largest share of the widebody market, a segment that tends to show better fuel-cost resilience than narrowbody.

Separately, programme-weighted, thrust-adjusted engine flying hours rose 5% year on year across January to May 2026, outpacing Safran’s equivalent metric over the same period.

Flying Hours Drive the Investment Thesis

The underlying financials confirm how far the recovery has travelled. Underlying operating profit rose from £1.6bn in 2023 to £2.5bn in 2024, a 57% increase, according to Rolls-Royce’s full-year 2024 results published on the London Stock Exchange. The pace of improvement is the kind of number that re-rates a stock; the question now is whether the next leg of growth can justify where the shares currently sit.

Beyond civil aerospace, the group is generating momentum in other divisions. Quartr’s IR summary of recent trading data shows Power Systems order intake for power generation was up 50% year on year in the first quarter, with a backlog of £7.3bn. The Defence division posted over 20% year-on-year growth in original equipment deliveries in the same period. Neither of these lines has driven the primary broker thesis, but they reduce the group’s dependence on any single revenue stream.

It is worth noting how far BoA’s own thinking has moved. The bank previously raised its Rolls-Royce price target from 400p to 420p at an earlier stage of the recovery. The 1,740p target is a markedly different assessment of the same business.

Valuation Remains the Honest Caveat

The current-year price-to-earnings ratio of 38 is the number that gives pause. For context, that sits above Nvidia’s multiple of 22, and Nvidia is the dominant supplier in artificial intelligence chips, a sector growing faster than commercial aviation. A P/E of 38 embeds a great deal of future delivery into today’s price.

The broader analyst community is more cautious than BoA. The consensus 1-year target for RR.L stands at 1,425.25p, per Yahoo Finance aggregated data, well below BoA’s 1,740p. Rolls-Royce’s own analyst consensus page notes the most recent formal compilation covered FY 2026 to 2028, drawing on 12 analyst submissions collected in April 2026. The forward dividend yield sits at 0.68%, so income is not the draw here; total return is entirely dependent on earnings growth and multiple expansion.

Analysts broadly forecast solid earnings growth to at least 2028 on the existing civil and defence business, before any contribution from small modular reactors, which are not expected to reach profitability before 2030. If that earnings cadence holds, the gap between current-year delivery and long-term ambition is narrower than the valuation premium might suggest. The next formal test of that cadence is the interim results, scheduled for 30 July 2026.