- BAE Systems
- 11 August 2026 12:45:19
Source: Sharecast
In an initiation note that is part of a wider European defence primes sector launch, RBC said: "While benefitting from wider defence tailwinds, we see BAE under-growing its European peers given its geographic and product mix.
"Geographically, this is driven by high US/UK exposure (70% of sales) growing at +11% / 8% versus NATO Europe (12% of sales) growing at +16% per annum."
Product-wise, RBC said it sees a highly diversified portfolio, but with notable slower growing fixed-wing platform exposure.
"Framed against our positive sector view, we see a price-to-earnings of 26x26E (versus peer average 27x) as fair and initiate at sector perform," it said.
In its broader note, RBC initiated coverage of Rheinmetall, Thales and Leonardo at ‘outperform’ with price targets of €1600, €330 and €70, respectively. It also started coverage of CSG and Saab at ‘sector perform’ with price targets of €18 and SEK600, respectively.
RBC said: "European rearmament is set to drive defence spending growth of 16% per annum to 2030E, with further high single digit percentage growth well into the next decade.
"This view is underpinned by our deep-dive European government budget evaluation and granular product-by-product weapons systems outlook analysis. The sector is down 13% from its March peak, which combined with the strong fundamental outlook creates an attractive entry point for the sector at large."
At 1243 BST, BAE shares were down 0.7% at 2,228p.