Rolls-Royce (LON: RR) Shares Break 200% Gains Over 12 Months

Rolls-Royce share price (LON: RR) continues to display a bullish trend, adding 1.3% to bring the 12 month gain to 204%. Despite pausing for breath in the past month, the stock seems to be well supported by the company's solid fundamentals, and strong analyst support.

The market's optimism seems well-placed, suggesting strong environmental, social, and corporate governance practices that appeal to socially conscious investors.

Sales forecasts for Rolls-Royce have been adjusted upward multiple times over the last twelve months, hinting at a positive market sentiment and an expectation of continued strong performance. The rising trend is backed by analysts who have repeatedly increased their revenue expectations for the current and coming years, reflecting confidence in the company's revenue growth prospects.

The 600p high price target looks attractive, but these analyst forecasts are dynamic, and can change very quickly. You would be well versed to do your own due diligence on how to value a company before looking to analyst numbers as guidance. The trends in analyst forecasts, and the direction of revisions can however tell you quite a bit about how sentiment and expectations for the upcoming 12 months are shifting.

Not only have revenue estimates been favourable, but analysts following Rolls-Royce have also significantly revised their earnings per share (EPS) expectations upward in the past year. Synchronised with this positive outlook, the average price target assigned by analysts to Rolls-Royce's stock has also seen a considerable climb over the past four months. This consensus suggests that analysts are re-evaluating the company's worth and anticipating potential gains in a changing market.

However, despite these upsides, there are aspects wherein Rolls-Royce does not quite meet investor expectations. While the company's earnings multiples are high, analysts forecast limited potential for EPS growth in the coming years. Sales estimates also show a lack of consistency, leading to decreased visibility into the firm's activities.

Whilst having positive sentiment from analysts can be a positive, the wide variance in price targets set by different analysts reflects the difficulties they face in valuing the company due to its unique challenges and diverse assessments. The number of strong upward revisions over the last 12 months typically signals a noteworthy shift in expectations regarding the company's performance but not all feel the same way.

As Rolls Royce share price looks to retest the recently set all time highs, and push back towards a $40 billion valuation, the question remains as to whether RR is a buy up at these levels.