This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
Trade Parameters
Technical Observations – For
Technical Observations – Against
Today BAE says £5bn Typhoon fighter jet pact with Qatar now effective. Shares bounced 5% after 11% selloff. As the UK’s largest defense contractor the company is considered non-cyclical and “defensive”, less sensitive to economic ups and downs. Any new contracts could boost the shares. Solid 3.6% dividend.
Risks to BAE Systems shares include a poor trading statement in October; Significant GBP strength reducing the value of USD contracts. A sustained market recovery that sees preference for riskier stocks (e.g. Banks, Financials, Miners), a cut to UK defense spending because of Brexit and, of course, broker downgrades.
Brokers/analysts are bullish on the shares with only 9% suggesting Sell. This is supported by 67% of broker price targets suggesting upside from current levels, to a consensus target of 695p, just above our target of revisiting July’s 16-month highs of 680p.
Next Event: Trading Statement, 10 Oct (est); Ex-dividend (9p), 18 Oct;
Latest Broker 12-Month Consensus: 70% Buy, 22% Hold, 9% Sell (full breakdown on request)
Source: DowJones Newswires, Reuters News, Bloomberg or Company Press releases
| 1wk | 1m | 3m | 6m | 1yr | 2yr | 3yr | 4yr | 5yr | |
| Perf % | 2.8 | 1.7 | -0.6 | 8.5 | 6.5 | 18.8 | 43.0 | 37.7 | 43.3 |
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Prepared by Michael van Dulken, Head of Research