GCIBAE Systems 'still riding high', says Deutsche Bank
Deutsche Bank has hiked its target price for and maintained a 'buy' rating on the aerospace and defence stock, saying that recent growth momentum is likely to continue.
In a research note entitled "Still riding high", the bank said it was adjusting its estimates ahead of BAE's annual general meeting on 9 May, when it expects guidance to be confirmed, with a possible update on order intake in the first four months os 2024.
"Since the start of the year, BAE has booked a series of high-profile orders," Deutsche Bank said. "2024 promises to be another strong year for order intake across all segments. It remains unclear whether BAE can match the FY23 record of £37.7bn, but a figure exceeding £30bn would make sense."
The bank noted that business growth at BAE is shifting to Europe and the Middle East. The company already has good exposure to the Nordic, Baltic and Eastern European states - the fastest growing defence markets in Europe - while Eurofighter orders could come from countries like Germany and Saudi Arabia.
Meanwhile, defence budgets are "still holding up" in the UK and US, which together made up 68% of sales in 2023.
"We raise our price target from 1,290p to 1,440p, thanks to the European defence sector re-rating, while valuations in the US are holding up too," Deutsche Bank said.
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.