Aerospace and defence stocks were making decent gains on Thursday afternoon after a well-received set of full-year results from power systems group Rolls-Royce.

Shares were up 3.0% on the day at 1,014p before the close of trade - extending the year-to-date rise to 16% - after the company reported that full-year underlying pre-tax profit rose 24% from £1,157m to £1,429m on underlying revenues that increased 8.0% from £11,277m to £12,209m.

Prime Markets' head of dealing Richard Curr said that despite the strong gains so far in 2013, there still could be further upside.

"With the order book showing a healthy premium over last year, in the view of Prime Markets there is little to prevent shares in the aero engineer accelerating higher. We buy Rolls Royce with a short-term target of 1,020p, but we fully expect continued progress once the shares reach that level."

JPMorgan Cazenove on Tuesday initiated coverage of Rolls-Royce with an 'overweight' rating, called it the "best-quality company in the [European aerospace and defence] sector".

Analyst David Perry said that this view was based on the firm's organic growth prospects over the next four to five years, its "best-in-class" RoCE (return on capital employed) and relatively low risk profile."

FTSE 250 defence and security firm QinetiQ, which announced last week that it remains on target to hit its full-year targets after an in-line third quarter, was also making gains this afternoon.

AIM-listed Avon Rubber, which provides respiratory protection to military and industrial markets, was also edging higher, a week after reporting that its financial year has "started positively".


Top performing sectors so far today
Aerospace and Defence 4,272.27 +1.53%
Food Producers & Processors 7,032.72 +1.30%
Forestry & Paper 8,875.60 +0.86%
Beverages 14,371.63 +0.84%
Mining 20,791.95 +0.39%

Bottom performing sectors so far today
Oil Equipment, Services & Distribution 24,836.05 -2.56%
Industrial Transportation 2,433.70 -2.19%
Mobile Telecommunications 3,936.05 -1.96%
Health Care Equipment & Services 3,975.58 -1.30%
Automobiles & Parts 6,020.52 -1.11%

BC

Related share prices
Rolls-Royce Holdings (RR.) share price
Avon Rubber (AVON) share price
QinetiQ Group (QQ.) share price