Broker snap: Rolls-Royce on course, says RBS

28th Jul 2011 11:34

"Trading is now improving" at Rolls-Royce, according to RBS, which keeps its positive stance on the aerospace, power systems and defense group with a buy recommendation."Our impression of the 1H11 result and the outlook comments is that Rolls-Royce is essentially on course," said analyst Sandy Morris.Rolls-Royce reported a record order book of £61.4bn, up 4% over the year, helped by a 60% jump in first half new orders which totalled £8.7bn. Meanwhile, underlying pre-tax profit rose from £465m in 2010 to £595m this year, helped by a larger installed base, better revenue mix, currency movements and better productivity, the firm said. "With activity on new aircraft engine programmes starting to rise and new production facilities coming on stream, there must inevitably be some associated launch costs and start-up costs, but momentum is building. Further, we now firmly believe that [original equipment] demand in the Marine division has begun to recover," Morris said.The broker stays with a 750p target price.Shares rose 0.78% to 646.50p at 11:25. BC