By Joice Alves
LONDON (Reuters) – Rolls Royce <RR.L> shares on Friday were heading for their best weekly gain since listing in 1987 as the British aircraft engine maker’s plan to raise money to cope with the coronavirus travel crisis triggered bargain hunting among investors.
The value of Rolls Royce shares more than doubled in the last week to 228.90 pence, although that is still a far cry from the 690 pence they traded at before the coronavirus outbreak.
The company aims to raise a total of 5 billion pounds, including 2 billion from shareholders, to cope with a “worst case scenario”.
“(The recapitalisation plan) sets up Rolls-Royce sufficiently to navigate an uncertain recovery and removes any lingering concerns about liquidity – and even solvency,” said Berenberg analyst Andrew Gollan, keeping a “buy” rating on the stock.
Worries over a long-haul travel slump reduced Rolls Royce’s market value to just 3.8 billion pounds ($4.9 billion) from 20.5 billion pounds two years back.
“There is a clear willingness to go bargain hunting as traders begin to see the light at the end of the tunnel,” said Joshua Mahony, senior market analyst at IG.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said there has been “renewed retail investor interest” with Rolls Royce shares the most purchased by her clients in the week ending Oct. 8.
The Capital Group of Companies, a major investor, raised its stake in Rolls to 8.70% from 7.91% on Thursday.
Rolls Royce shares were up 17.8% on Friday by 1136 GMT, among the top performers on the pan-European STOXX 600 <.STOXX> index. Analysts said the stock still looked cheap.
($1 = 0.7723 pounds)
(Reporting by Joice Alves; Editing by Kirsten Donovan)