BAE shares lifted by orders ahead of pre-pandemic expectations

FTSE 100 listed aerospace and defence manufacturing firm, BAE Systems (LON:BA), saw its shares climb higher on Wednesday, with the company noting that orders were ahead of its pre-COVID predictions.

BAE stated that demand remains ‘high’, and celebrated the German Parliament’s decision to approve the purchase of 38 Eurofighter Typhoon aircraft, which it said was a ‘significant’ development. It added that it was working with Eurofighter GmbH and industrial partners to conclude relevant contracts in the near future.

The company also said that it has a large backlog of orders and incumbent programme positions, which it expects to lead to strong top line growth with increasing cash conversion in coming years.

BAE continued, saying that backlogs have created good growth potential in its US business. It continued, saying that it will continue to support European and UK partners in their efforts to spend 2% of their respective GDPs on defence. The company said that it will continue its contractual support arrangements in Saudi Arabia, and that it remains the leading defence contractor in Australia.

Looking ahead, the company retains its full-year guidance for sales and cashflow, though underlying earnings per share are expected to be ahead of expectations, based on ‘good operational performance’ and lower taxes offsetting negative currency impacts.

Speaking on the company’s financial performance, BAE Chief Executive, Charles Woodburn, said: “We have continued to deliver a resilient performance in line with our expectations for a strong second half, thanks to the outstanding efforts of our employees in these challenging times.”

“From a position of strength, the actions we took in quarter two to enhance our resilience are working well as reflected in our guidance, ensuring we continue to deliver on our customer priorities, whilst keeping our employees safe. Demand for our capabilities remains high and we recognise our role not only in supporting national security, but also in contributing to the economies of the countries in which we operate.”

Following the update, BAE shares were up over 2% at lunchtime on Wednesday, up to more than 475p a share 11/11/20. This price is ahead of its year-to-date nadir, seen in October, of 397p a share. It is also more than 25% below the below analysts’ target price of 620p a share.

Analysts currently have a consensus ‘Buy’ rating on the stock; its p/e ratio of 13.05 is below the industrial products sector average of 32.07; and the Marketbeat community has a 50.22% “underperform” stance on the stock.


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Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.