Rolls-Royce share price forecast for December 2022

Rolls-Royce (LON: RR) share price made a strong recovery in October and November as demand for the stock rose. The shares climbed by more than 41% from the lowest level in October. It rose to a high of 92.82p in November, which was the highest level in July. 

Strong growth

Rolls-Royce Holdings is one of the biggest manufacturing companies that manufactures a broad array of products. It specializes in civil aviation, defence, and power industries. In civil aviation, the company manufactures engines and then services.

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Its civil aviation business is its biggest and most important. In the past few months, the company has seen its business boom as the number of orders rose. Further, the rebound happened as intercontinental travel soared.

Rolls-Royce makes most of its money by providing services to jet engines it sells. As such, its business success is often measured by the number of flight hours. 

The stock rallied after the company published its trading statement on November 3rd. The firm said it had completed its ITP Aero disposals and used the funs to pay its £1.6 billion loan to the UK Export Finance backed loan due in 2025. 

The number of flying hours rose to 65% of 2019 levels in the four months to the end of October. This uneven recovery was due to the slow recovery in China, which is still under a lockdown. 

Its defence business boomed as countries boosted their spending following the invasion of Ukraine. It had $1.8 billion in contract renewals in the United States. Revenue growth this year is expected to be modest because of the non-repeat of legacy spare parts.

Further, its power systems business is seeing strong demand. Meanwhile, Rolls-Royce Holdings tested a jet engine running on hydrogen. Still, it is unclear when the jet engine will go into production. For one, the jet engine being tested has extremely low speeds that are not viable for today’s jets.

Rolls-Royce share price forecast

The chart above shows that the RR share price has been in a strong bullish trend in the past few weeks. It rallied from a low of 65.26p in October to a high of 92.75p. This rally was in line with my past article on Rolls Royce. It has moved above all moving averages.

A close look shows that the stock has formed a double-top pattern at 92.75p. In price action analysis, this pattern is usually a bearish sign.

Therefore, the stock will likely drop to a low of 81.24p in December. This is an important level since it was the highest point on September 12.