BAE Systems has justified its sharp rally this year with a ‘strong’ pipeline of orders and is set to benefit from increased defence spending by many countries as global tensions remain elevated.
BAE shares were down 1.7% at the time of writing on Thursday but are up 16% year to date.
The company noted orders for F-35s and Tempest higher jets, naval guns, and intelligence and security services.
“There were no big surprises from BAE Systems in today’s update. Many governments are expected to continue raising their defence budgets amid escalating global tensions, and BAE’s diverse geographic reach means it’s set to benefit by capturing this extra spending,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.
“That’s reflected in bumper order intakes so far this year which are once again expected to exceed full-year sales. These orders are typically long-cycle too, spread over several years, so it gives BAE multi-year revenue visibility. An enviable asset to have in uncertain times.
“That’s led BAE to reaffirm all of its full-year guidance. Underlying earnings per share growth is expected to outpace sales growth this year, helped by a buyback programme that’s moving full steam ahead.”