The Rolls-Royce Holdings (LSE: RR.) share worth rise has been an excellent inventory market success story.

Since October 2022, Rolls-Royce shares have greater than six-bagged, to 427p as I write. And it looks like solely days in the past that we had been questioning if the worth might attain £4 this 12 months.

What might make it preserve heading up additional in 2024?

Fundamentals

Inflation is slowing, and rates of interest may even begin to come down as early as Could. That would assist the civil aviation enterprise, and get extra hours on Rolls-Royce engines.

The good unrests on the planet are giving defence spending a lift, which also needs to assist companies like Rolls-Royce. Plenty of European nations have already introduced huge plans.

It might help the robust forecasts for revenue progress within the subsequent few years that we see at this time.

The factor is, there’s nothing new right here, and that is all nicely sufficient recognized by traders. However I feel two key issues might be pushing the Rolls-Royce share worth greater than is perhaps justified by fundamentals.

And that might spell hazard.

Dealer consensus

Not way back, the consensus share worth goal from broker forecasts was round 400p. It was shortly damaged, and it’s now up at 440p. And that makes me ask a key query.

What made the brokers change their thoughts?

Did they have a look at the proof once more, re-do all their sums, and work out they had been mistaken and had set it too low? Or did they only assume: “Hmm, it’s gone up, so we’d better raise it some more.”

Virtually all analysts have Rolls-Royce as a purchase, and nearly no person says we should always promote.

And I reckon it would keep like that so long as the worth retains rising. Then sooner or later it would cease, may even fall, and brokers will change their minds.

However my cash says they’ll solely do this after issues begin to stall, not earlier than. Brokers are nice at taking a look at what’s already occurred and simply including a bit.

Sentiment

This ever-growing push helps preserve the upward pattern going. Traders see the newest improve from a good analyst, and that reinforces their confidence.

Bullish market Sentiment then feeds again into the social gathering and encourages the Metropolis to maintain the ball rolling.

I recall the outdated saying that “the pattern is your buddy till the bend on the finish“. However no person appears to identify the bend till after it’s bent.

It appears to me like a variety of share merchants don’t do something extra complicated than purchase what’s going up and promote what’s taking place.

That sentiment pushed Rolls-Royce shares to depths that we now see had been too low. And I reckon it would additionally push them too excessive, now they’re on the way in which up.

What to do?

I do nonetheless assume Rolls-Royce is a superb firm with a robust long-term future. And sooner or later, I would fee its shares nearly as good worth for a long-term purchase.

However whereas I feel the worth is being pushed nearly solely by momentum, it’s not the time for me.