Rolls-Royce Holdings (LSE: RR.) shares have rocketed over 1,100% in the past five years. And they got an extra boost on 26 February after the aero engine giant posted another stellar set of results.
But then the war in Iran started and oil prices surged. And it looks like the share price is taking a bit of a kicking. As I write on Monday (9 March), Rolls has fallen 3.5% on the day. And it’s down nearly 15% since its recent 52-week high.
The most recent fall comes at a time when oil benchmarks Brent Crude and West Texas Intermediate are hovering around $100 per barrel. Both had earlier peaked above $119.
Flights grounded
Few will have failed to notice the chaos hitting air travel as the Iran conflict spreads — and the dips in airline stocks. With Middle-East hubs playing a major part in global aviation networks, the damage is far more widespread than the region. Lots of flights cancelled means fewer flying hours on aeroplane engines. And that could have a knock-on effect on Rolls-Royce’s maintenance and service work.
And more generally, soaring oil pushes ticket prices up and demand down — that can feed back to the bottom line for Rolls too.
We really must put this into perspective though. Right now, politicians are talking about this whole thing lasting weeks rather than months. And after oil jumped following the previous US and Israeli strikes on Iran, it quickly fell again once relative calm was resumed.
Bigger picture
Rolls-Royce shares have given up some of their gains so far in 2026, but we’re still looking at a year-to-date rise of 6%. And over the past 12 months, we see Rolls up more than 50% — cementing that truly spectacular five-year journey.
So what should Rolls-Royce shareholders, and potential investors, do now? I think this is a good time to remind ourselves of the importance of diversification. We never know when sector-specific turmoil will come. But we can be pretty certain that it will happen from time to time. And diversification can significantly lower our risk.
On top of that, I want to quote some words from my US Motley Fool colleague Jim Mueller: “Take a longer view of time. Over history, the stock market has gone up and to the right. Over time.”
Recent upgrades
So what were brokers thinking before the weekend’s doom and gloom hit us? In the early days of March, Deutsche Bank rated the stock a Buy and set a price target of 1,550p. Berenberg, however, went with a more modest Neutral rating at 1,250p.
The average price target is now 1,395p, which is around 15% ahead of the price as I write. But, perhaps more telling, it’s below the post-results high. Is analyst enthusiasm starting to wane? There’s still is a solid Buy consensus in the City, so maybe not.
For me, the current troubles don’t really change the long-term outlook for Rolls-Royce shares. Growth investors looking to the next decade and beyond should still consider them, I think.
