Source: Sharecast
"Around the world, security threats continue to grow, leading governments to increase defence spending," the company said in a trading statement.
“We expect significant opportunities across our business, including space systems, missile and air defence systems, drones and counter drone technology, electronic warfare, combat aircraft, combat vehicles, frigates and submarines, among other customer priorities.”
BAE expects sales growth of 7% - 9% on 2025’s £30.7bn and underlying operating profit growth of 9% - 11% on the £3.3bn reported last year.
“A favourable backdrop for BAE Systems is old news for the market and the shares largely failed to fire after its latest update," said Dan Coatsworth, head of markets at AJ Bell.
“Somewhat counterintuitively, defence stocks have taken a step back during the Iran conflict. As one of the top performing parts of the market heading into the crisis, they were an obvious place for investors to book profits as nervousness started to build.
“News from elsewhere in the sector hasn’t been uniformly positive and there have been rumblings about the role of drone warfare and whether this will render some of the big, heavy, expensive kit sold by the likes of BAE somewhat redundant.
“There is little sign of that yet in BAE’s statement – full-year guidance is unchanged from that given in February and the company can point to several significant contract awards since the start of the year. This offers some evidence that the talk, particularly in Europe, about bolstering military capabilities is translating into procurement action."
Reporting by Frank Prenesti for Sharecast.com
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