Rolls-Royce (LON:RR.) shares still don’t appeal to number crunchers at Deutsche Bank despite the recent share price fall.
The aircraft engine maker’s stock has tumbled 18% so far in 2014 to 1,050p, but the risks of investing in the shares still outweigh the rewards, according to the German broker.
“We have a number of overhanging concerns which in our view are still not adequately factored into valuation,” said analyst Benjamin Fidler.
These are the slower pace of unit cost progress in the civil aerospace division, overhanging M&A risk driven by the CEO’s diversification plans, and the accounting risk which has risen following recent events with the Financial Reporting Council.
Fidler cuts his target price from 1,090p to 860p to reflect these issues and sticks firmly by his ‘sell’ recommendation.
On Monday, Rolls’ shares rose as it confirmed it would buy out German carmaker Daimler’s stake in their power systems joint venture.