Citi downgrades Rolls-Royce to 'neutral', shares slump

(Sharecast News) - Rolls-Royce slumped on Monday after Citi downgraded its stance on the shares to 'neutral' from buy' on valuation grounds.

"Following a strong recovery from the depths of Covid, we believe Rolls-Royce shares are now approaching what we consider to be current fair value," it said.

"We have increased our target price to 641p, leaving some upside, but insufficient to remain buyers."

At 1030 GMT, the shares were down 2.7% at 569.40p.

Russ Mould, investment director at AJ Bell, said: "Even though Citigroup raised its price target for the stock, investors appear to have taken the rating downgrade as a signal to lock in some profit.

"Rolls-Royce has been a runaway success for investors in recent years as its recovery story gained traction. The turnaround opportunity is now looking like old news and investors increasingly want to hear about the next phase of the company's growth, not simply what it is doing to get back on track as that looks to have already happened."