- BAE Systems
- 10 December 2024 10:27:20
Source: Sharecast
The broker raised its target for the shares from 1,360p to 1,440p, indicating 20% upside from Monday's closing price of 1,199p.
"The growth drivers for BAE Systems (BAE) continue to be its Maritime division, and its armoured vehicles businesses in Sweden and the US (c33% of revenue combined)," Berenberg said in a research note on Tuesday.
"Visibility is extending in each of these areas through recent contract awards and the order pipeline will remain buoyant over the coming years, in our view. This will be driven by the restocking of military equipment linked to the conflict in Ukraine and the demand boost from the US supplemental aid package to Ukraine."
Beyond this, the broker pointed to long-term drivers like the Global Combat Air Programme fighter jet and the AUKUS submarine alliance, which will run for several decades, which provides good visibility for the business.
As for this year, Berenberg as pencilled in 13.2% revenue growth, in line with the company's own guidance of 12-14%, with EBIT margins flat at 10.6%, resulting in an adjusted EBIT of £3.04bn, down 0.7% on last year.
With a "promising" order outlook – particularly across BAE's armoured vehicle and combat air portfolio – the broker kept a positive stance on the stock, which trades at 15.9 times forward earnings.
Despite the upbeat comments, shares were down 1.2% at 1,184.5p by 1026 GMT.