BAE Systems: Stifel remains to be retained


Stifel reaffirms its ‘hold’ advice and its price target of 500 pence on BAE Systems, despite lowering its EPS estimates to very slightly below consensus levels from 2022, the occasion for an update of its model.

‘BAE is, in our eyes, generally well led, with margins close to effective ceiling levels, a solid book-to-bill ratio of the last three years 1.13 times, and a welcome resumption of share buybacks’, judges the broker.

However, Stifel points to ‘dominant issues such as a backdrop of pressure on defense spending from its largest customers, a deadlock on significant Saudi orders, coupled with upward pressure on tax rates.’

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