Brokers lift Rolls-Royce targets after Daimler buy-out

10th Mar 2014 14:27

A host of analysts lifted their target prices for Rolls Royce on Monday after the engine group's move last week to buy-out Daimler in their 50-50 joint venture, Rolls-Royce Power Systems (RRPS).After the close of trade on Friday, Rolls-Royce said that it is to buy the remaining 50% stake in RRPS for £1.9bn. RRPS was formed in 2011 after Rolls-Royce and Daimler bought German engine maker Tognum.Rolls-Royce Chief Executive John Rishton said that RRPS operates in long-term growth markets and has "proved a valuable addition to our Marine and Industrial Power Systems division".The transaction is expected to complete within the next six months and is subject to the usual regulatory approvals."With RR now having 100% control of RRPS, we believe that it can achieve some operational synergies as well when the deal closes," according to analysts at JPMorgan Cazenove.The US bank has lifted its earnings estimates for the next three years and raised its target price for the stock from 1,315p to 1,400p, keeping an 'overweight' recommendation.RBC Capital Markets, which rates Rolls-Royce as 'outperform', also upped its target from 1,190p to 1,270p, while Bank of America Merrill Lynch ('neutral') lifted its target from 1,100p to 1,120p.The stock was 1.4% higher at 1,040p by 14:45.BC