Citi has raised its price target on Rolls-Royce Holdings following expectations of stronger cash flow and increased demand for the company’s power systems in data centers.
The investment bank upgraded its target to 500 pence per share from 450 pence, citing robust demand for Rolls-Royce’s gas turbine and power generation solutions as data center operators expand capacity globally. Analysts also highlighted improved cash flow projections, attributing the outlook to operational efficiencies and sustained demand across aerospace and defense sectors.
Rolls-Royce’s power systems division, which supplies critical infrastructure for data centers, has seen growing order backlogs amid the rapid expansion of cloud computing and AI-driven workloads. The upgrade reflects confidence in the company’s ability to capitalize on long-term trends in energy infrastructure, even as broader economic conditions remain uncertain.
Shares of Rolls-Royce were up 1.2% in early London trading on Tuesday, outperforming the FTSE 100 index. The stock has gained approximately 15% over the past three months, supported by strong order intake and operational improvements.
Citi’s upgrade follows a series of positive analyst revisions for Rolls-Royce, which has benefited from a rebound in commercial aviation and defense spending alongside its growing role in industrial power generation.
