Bank of America (BoA) has lowered its Rolls-Royce (LSE:RR.) price target from 1,850p to 1,625p, yet it’s kept a Buy rating. Is it a warning, or simply a more cautious view?

I always say take broker targets with a pinch of salt, but there still might be a reason here to look closer. After all, Rolls’ share price is down 20% from its August all-time high, near 1,586p.

So that brings us to the real question: is this a buying opportunity, or a Sell signal?

Why BofA cut the target

According to BofA, engine flying hours is a core concern. The bank worries that large engines will only fly for 113% of their 2019 levels in 2026. That’s below not only Rolls’ guidance of 115%-120%, but also Wall Street’s 116% consensus.

It’s a fair argument. Much of Rolls’ civil-aerospace value derives from engines already flying – through maintenance, spare parts and long-term service agreements. Less flying hours would likely mean less aftermarket work… and less revenue.

And if BofA expects slightly fewer flying hours, it must also expect less aftermarket activity. Probably why the bank has trimmed its 2028-2030 free cash flow forecasts by 6% to 9%.

But it’s not all doom and gloom. It still expects the installed base of large engines to grow through 2031.

So while it isn’t saying the engine fleet’s shrinking, it is worried that near-term cash flow might be throttled.

A cut, but not a downgrade

In fairness, BofA has maintained a Buy rating, so this looks more like a valuation and timing issue rather than an expectation of a price reversal.

So far, no other broker has followed its lead. UBS raised its target to 1,900p in October and Jefferies still holds its target of 2,000p since August. That’s a wide gap from BofA’s 1,625p target, and it shows the market still disagrees about how quickly Rolls-Royce’s earnings can compound.

For now, the growth narrative remains intact, but flying hours are a genuine risk worth watching.

What today’s results must prove

Rolls publishes its latest trading update today (12 November) and investors want a reassurance that the company can meet its upgraded 2026 guidance.

• Underlying operating profit: £4.7bn-£4.9bn.
• Free cash flow: £3.8bn-£4bn.
• Large-engine flying hours: 115%-120% of 2019 levels.
• Share buyback: £2.5bn planned for 2026, with £1.4bn completed by the half-year results.

If it maintains guidance and flying hours come in close to expectations, BofA may look too cautious. But if they disappoint, investors may need to start questioning this rally’s momentum.

Final thoughts

Rolls-Royce is still running on its turnaround story, having rebuilt margins, generated cash and returned capital to shareholders. But the shares are starting to lose their sheen.

The valuation remains high, which means solid execution and strong results are needed to keep the rally going — particularly while the civil-aerospace cycle faces questions. 

Confirmed guidance, resilient flying hours and continued buybacks mean this dip could be an opportunity worth considering. But I won’t make any decisions until I see solid numbers.

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Mark Hartley does not hold any positions in the companies mentioned.