Rolls-Royce (LSE: RR.) shares have offered some of the best returns on the London Stock Exchange of late. What might be on the menu for the next 12 months?

If analysts are on the money, then what’s in store is a 26.1% increase from the consensus or a 51.3% increase at the top end. That could turn £10k into over £15k by April 2027.

How likely are these predictions to come true? Has the conflict in Iran thrown a spanner into the works here? Or could Rolls-Royce do the thing it has developed something of a penchant for – smashing the expectations and surging higher than almost anyone expected?

Repercussions

The fast-moving (and completely awful) situation in the Middle East is the number-one thing to focus on here. The Rolls-Royce share price has dipped 18% since the start of March – wiping out over £10bn in market-cap in the process – which suggests investors think the conflict will have serious repercussions for the FTSE 100‘s largest manufacturer.

It’s a real cavalcade of issues too. Grounded flights are a central problem. The engines that Rolls-Royce produces are sold at low profits – sometimes at a loss – and the real money’s made through servicing. When planes aren’t flying, those maintenance fees aren’t coming in.

The rising price of oil won’t help in this regard either. More expensive fuel means costlier flights, which could deter jetsetters, leading to fewer flying hours as well.

Inflation up and down the supply chain is expected. Interest rate hikes on the horizon will make investment less likely. And a struggling economy could be a waning tide that lowers all boats.

To sum up? If the conflict continues for long, then I think the more optimistic analyst projections could age very badly.

Spotlight

In the middle, there’s a silver lining to this particular cloud. I am referring to energy security. Recent events have shone a spotlight on how frail the systems are that many countries rely on. To take just one example, the Philippines – a country as far from the action as you could imagine – just declared a “national energy emergency” because it was relying so much on energy coming in from the Gulf region.

Why’s this relevant for Rolls-Royce? Because the British firm’s working on a possible solution in SMRs – mini nuclear power stations that are clean, easy to build, and can be mass produced. Imagine the Ford T for nuclear power plants; roll them out and energy security could be a problem of yesteryear.

Yes, it’s a long way off. And yes, there are a lot of hurdles to leap before we get there. But I wouldn’t be surprised to see more cash thrown in this direction, like the £2.5bn from Great British Energy in the last year.

Overall? It’s been a rocky month or two for Rolls-Royce, but I think long-term prospects still look excellent. A stock worth considering, in my view.