Image source: Rolls-Royce plc
Despite some tariff-induced volatility in April, the Rolls-Royce (LSE:RR.) share price has delivered some robust gains in 2025. Year to date, the engineering giant’s market-cap has expanded by over 30%. And over the last 12 months, shareholders have seen their positions grow by an impressive 80%, far outpacing the FTSE 100.
That means anyone who bought £5,000 worth of shares back in May 2024 is now sitting on around £9,000. And that’s before counting the extra gains from the newly-reintroduced dividends that were paid last month. The question now becomes, is it too late to jump on board the gravy train?
Here’s what the experts are saying
Rolls-Royce’s stellar financial turnaround since 2023 has changed the tone of many institutional investors. That’s not surprising, given it was only a few years ago when Rolls-Royce was flirting with potential bankruptcy. Yet today, the company has been transformed into a free cash flow generating machine.
But even beyond this, the firm’s also capitalising on rising tailwinds within the civil and defence aerospace sectors. Average flight hours for commercial airline travel surpassed pre-pandemic levels in 2024 and have continued to grow. At the same time, with geopolitical tensions rising, defence orders across Europe have reached record levels.
Needless to say, the outlook’s positive. And that’s clearly being reflected in the Rolls-Royce share price targets of institutional analysts.
| Institutional Analyst | 12-Month Share Price Forecast |
| Panmure Liberum | 820p |
| JPMorgan Chase | 900p |
| UBS | 1,000P |
| Bank of America | 1,150p |
Crunching the numbers
As with all forecasts, there’s always a degree of inaccuracy based on assumptions made. That’s why there seems to be a fairly broad range of opinions. But by taking the average of these projections, it would appear that if the company isn’t disrupted: the Rolls-Royce share price could be 967.5p by this time next year.
Comparing that to where the stock’s currently trading, this represents a 26.3% potential gain. Bumping that up slightly by the group’s 0.8% dividend yield puts the total return roughly around 27.1%, enough to transform a £5,000 investment today into £6,315.
What could go wrong?
As impressive as the revamped Rolls-Royce appears, it still has notable weak spots. Rising global trade barriers could disrupt its exceptionally complex supply chain. And the 25% US tariff on UK-manufactured luxury cars threatens the group’s automotive segment.
Both scenarios could cause notable short-term volatility. Fortunately, management has already begun taking mitigating action to minimise financial turmoil. But even if these steps prove successful, there’s still the question of the security of its future growth.
Its UltraFan project promises to deliver 25% greater fuel efficiency paired with significantly reduced emissions. Some critical milestones have already been met, but even the most optimistic timeline for this engine to reach commercial production isn’t until the 2030s. It’s a similar story for its small modular reactors, which have also yet to prove their commercial viability.
Given both these projects are an essential part of Rolls-Royce’s future, a failure to deliver on promises doesn’t bode well for long-term shareholders, especially if a competitor beats it to the punch. Personally, I remain cautiously optimistic.
While most of the explosive growth potential has likely already been realised, there could still be considerable long-term gains to be enjoyed. As such, investors may want to consider digging deeper.
