BAE Systems plc Stock Today (4 December 2025): Share Price Pullback, New Defence Contracts and 2026 Forecasts

BAE Systems plc (LSE: BA., OTC: BAESY) remains one of the most closely watched defence stocks on the planet. As of 4 December 2025, the share price has cooled sharply from record highs, even as the company racks up fresh contracts in land systems, missiles, cyber and space, and reiterates upgraded guidance for 2025.

Here’s a deep dive into where the stock stands right now, the latest news hitting the tape, and what analysts are expecting into 2026.

Where the BAE Systems share price stands on 4 December 2025

On the London Stock Exchange, BAE Systems stock is trading in the mid‑£16 range. MarketBeat reports that on Wednesday 4 December the shares traded up about 0.9% intraday, reaching 1,635.5p and last changing hands around 1,624p, on heavy volume of nearly 10.8 million shares. ^[1]

Stockopedia’s delayed quote shows a most recent price of 1,650.5p, giving the group a market capitalisation of roughly £49.6 billion. ^[2] MarketWatch notes that the shares closed around £16.44 on 3 December and are still about 20–21% below their 52‑week high of £20.73, set on 1 October 2025. ^[3]

Over the last year, the share price is up roughly 28–40% depending on the data source, significantly outperforming broader UK equity indices. ^[4] Over five years, a Simply Wall St/Yahoo Finance analysis pegs total returns at around 267%, underlining just how dramatic the multi‑year rerating has been. ^[5]

From a valuation standpoint:

Stockopedia puts BAE’s trailing price/earnings ratio at about 19.8x, with a forward P/E similar and forecast EPS growth of around 12.5%. ^[6]
MarketBeat, using a different earnings basis, cites a P/E closer to 27.9x and a PEG (price/earnings‑to‑growth) ratio of about 3.3. ^[7]

Whichever exact denominator you prefer, BAE is trading on a premium multiple versus the wider UK market, but with growth rates that are higher than the average “defensive” stock.

Why the BAE Systems share price has pulled back

The main story of late 2025 is that BAE has fallen sharply from its peak even while the underlying business continues to look strong.

Multiple commentators, including recent articles from TS2 and Motley Fool UK, highlight that the shares are down roughly 20–23% from recent highs, after a long run‑up driven by surging defence budgets and order wins. TechStock²+2The Motley Fool+2
A DCF‑based valuation note referenced by Yahoo/Simply Wall St suggests the stock remains 20–35% below its estimated intrinsic value, depending on the assumptions used. ^[8]

In other words: part of the drop looks like good old‑fashioned profit‑taking after a monster rally, and part of it is the market re‑rating a high‑quality defence stock that was trading close to perfection.

Technical indicators reinforce that “cooling‑off” story. A short‑term technical model for the U.S. ADR BAESY shows the stock has fallen more than 9% over the past 10 days and is now in oversold territory on the 14‑day RSI, even though a minor “pivot bottom” buy signal has appeared. ^[9] Stockopedia’s momentum data shows BAE is down about 21% over six months and roughly 20% below its 52‑week high, despite still being up around 10% over 12 months. ^[10]

So the equity narrative going into December 2025 is: strong company, strong cycle, but a stock that has finally remembered gravity.

Fresh contract wins: artillery shells, ACVs, Bradleys and missile canisters

Even as the share price consolidates, the news flow around contracts has been relentless. Over the past couple of weeks BAE has announced a string of awards that reinforce its position across land and naval systems.

UK 155mm artillery ammunition orders

On 4 December, the UK Defence Journal reported that the British government will place additional orders for 155mm artillery shells with BAE Systems’ Washington facility in north‑east England. ^[11]

The Washington plant – a new £75 million facility built on the site of a former Dunlop factory – forges, machines and heat‑treats large‑calibre mortar, artillery and tank ammunition. The new orders are part of the UK’s push to build long‑term munitions capacity, driven by NATO commitments on 155mm stockpiles and ongoing support for Ukraine. ^[12]

For BAE shareholders, this is more than just one contract: it signals that high‑volume munitions production is being treated as a strategic national capability, providing long‑tail, relatively visible revenue.

$184.4m Amphibious Combat Vehicle (ACV) deal

On 3 December, Zacks – via Nasdaq – reported that BAE Systems Land & Armaments LP, part of the BAESY business, secured a $184.4 million modification contract from the U.S. Marine Corps for 30 Amphibious Combat Vehicle (ACV) mission‑role variants, to be completed by March 2028. ^[13]

The ACV family is designed to carry Marines from ship to shore with a mix of open‑ocean capability, land mobility and survivability. BAE’s ACV‑30 (with a medium‑calibre cannon), command variant and recovery variant give it a strong foothold in the U.S. Marine Corps modernisation cycle. ^[14]

$390m Bradley A4 contract for the U.S. Army

In late November, BAE definitised a contract worth over $390 million to produce additional Bradley A4 fighting vehicles for the U.S. Army, with deliveries running to 2026. ^[15]

That contract sits on top of BAE’s wider U.S. combat vehicles portfolio and adds to the already substantial backlog in its Platforms & Services segment.

Mk 41 Vertical Launch System (VLS) canisters for the U.S. Navy

BAE has also been awarded a $22 million contract by the U.S. Navy to produce missile canisters for the Mk 41 Vertical Launching System, with options that could raise the value substantially over time. ^[16]

Taken together, these deals underline a simple point: the land and naval hardware order book is still thickening, even after several years of elevated defence spending.

Cyber and space: Velhawk and Azalea satellites

BAE is clearly trying to show investors it’s not just an old‑school “metal basher.”

Velhawk™ next‑generation cybersecurity framework

On 3 December, BAE Systems announced Velhawk™, a next‑generation cybersecurity framework aimed at government customers, combining AI, automation and adaptive analytics in a zero‑trust architecture. ^[17]

According to the launch release, Velhawk is designed to:

automate critical detection, decision and remediation workflows
reduce incident response times and staffing requirements
integrate threat intelligence, secure data management and rapid response into a single “ecosystem.” ^[18]

From an equity angle, Velhawk sits in the Cyber & Intelligence segment – an area where margins tend to be higher and where the long‑term growth runway (national cyber defence, AI‑driven security operations) is structurally attractive.

Azalea satellites and space electronics

Within the last day, BAE confirmed that three Azalea radio‑frequency satellites – designed and built by the company – have been successfully launched via Exolaunch as part of a new multi‑satellite constellation. ^[19]

Earlier analysis from TIKR and others has pointed out that global defence spending has crossed $2.5 trillion in 2025, and space‑related defence and intelligence is one of the fastest‑growing slices of that pie. BAE’s push into radiation‑hardened chips (via its RH12™ Storefront) and space electronics partnerships with foundries like GlobalFoundries suggests it is quietly building a space‑adjacent electronics franchise, not just a satellite hardware shop. ^[20]

GCAP fighter programme and international partnerships

On 4 December, Reuters reported that Italy’s defence minister believes Germany, Australia and several other countries may be interested in joining the Global Combat Air Programme (GCAP), the next‑generation fighter jet initiative led by Italy, Britain and Japan. ^[21]

BAE Systems is the UK industrial lead on GCAP. If additional nations formally join the programme, that could:

increase total aircraft volumes
spread development costs across more partners
deepen BAE’s export opportunities for associated sensors, weapons and support contracts. ^[22]

Meanwhile, BAE has already booked around £4 billion of orders for 20 Typhoon aircraft and weapons integration for Türkiye, underlining that current‑generation fighters are still generating substantial cash even as GCAP ramps. TechStock²+1

Trading update: upgraded 2025 guidance intact

The backbone of the investment case is the November trading update, which reaffirmed upgraded full‑year guidance first raised at the half‑year stage.

Across summaries from Hargreaves Lansdown, Morningstar, Smartkarma and TS2, the current 2025 guidance is: ^[23]

Sales growth: +8% to +10% versus 2024’s £28.3 billion revenue
Underlying EBIT growth: +9% to +11% from a 2024 base around £3.0 billion
Underlying EPS growth: +8% to +10% from 68.5p
Free cash flow: > £1.1 billion expected for 2025
Cash returns: about £1.5 billion to be returned to shareholders via ordinary dividends and a £500m buyback

Order intake for the year to date stands at over £27 billion, including: TechStock²+1

roughly £4bn for Typhoon aircraft and weapons integration for Türkiye
$3.3bn in electronic systems programmes
$1.7bn in U.S. combat vehicle orders
£1.1bn through missile orders via MBDA
close to £0.9bn for the UK’s Dreadnought submarine programme

The overall order book is around £75 billion, close to record levels and equivalent to roughly 2.5–3 years of current revenue. TechStock²+1

Management has flagged the risk that a prolonged U.S. government shutdown could delay some payments and contract awards in its American business, but emphasised that no material impact has been seen so far. ^[24]

Dividend, buybacks and cash returns

BAE continues to market itself as a “defensive growth plus income” stock.

The interim dividend for 2025 was increased by 9% to 13.5p per share, and was paid on 3 December 2025. ^[25]
Dividend tracking sites show that, including the June payment, 2025 cash dividends total about 0.35 GBP per share, implying a trailing yield of just over 2% at current prices. ^[26]
Management expects total cash returns (dividends plus buybacks) to reach roughly £1.5 billion for the full year. ^[27]

Regular “Transaction in Own Shares” announcements show the buyback grinding away in the background. For example, on 26 November BAE repurchased over 100,000 ordinary shares in the 1,634–1,650p range under its ongoing programme. ^[28]

The end result: you’re looking at a mid‑20s‑P/E stock with a ~2–2.4% yield, but backed by a large, visible backlog and rising defence budgets.

Analyst ratings and BAE Systems share price forecasts

Analysts remain broadly positive, albeit less euphoric than when the shares were near £20+.

MarketBeat data shows a “Moderate Buy” consensus based on four Buy ratings and one Hold, with an average price target around 1,997p, and a recent Deutsche Bank target lifted to 2,220p. ^[29]
Stockopedia aggregates broker targets into a consensus of about 2,074p, some 25.7% above the latest 1,650.5p share price. ^[30]
A TS2 review of Investing.com data finds that 18 analysts cover the stock, with 14 rating it Buy, four Hold and two Sell. The average 12‑month price target is 2,120.7p, with a range from 1,370p to 2,500p – implying roughly 30–32% upside from early‑December levels. TechStock²
GrowthInvesting.net summarises a similar picture, citing an average analyst target of £21.96 (2,196p), implying around 34% upside from current prices. ^[31]

On the U.S. OTC market, BAESY closed at $88.55 on 3 December, up about 40% over 12 months, with a trailing P/E near 24x, forward P/E near 20x and a dividend yield just above 2%. ^[32] Zacks currently rates the ADR a Rank #3 (Hold) despite highlighting strong contract momentum. ^[33]

Independent research is split between the “cheap compounder” and “quality but fairly priced” camps:

Morningstar describes BAE as a “wide‑moat” company still trading below its internal fair value estimate. TechStock²
A detailed TIKR analysis notes that with revenue expected to grow ~7% annually and net margins around 11%, a 20x P/E would support mid‑single‑digit annualised returns from today’s price – respectable, but not spectacular given geopolitical risk. TechStock²+1

The macro backdrop: defence super‑cycle still in play

Global defence spending has reached an all‑time high of over $2.5 trillion in 2025, driven by the war in Ukraine, rising tensions with Russia and China, and modernisation drives in the U.S., Europe and the Indo‑Pacific. ^[34]

BAE’s portfolio is unusually well aligned with many priority programmes:

submarines and frigates (Dreadnought, AUKUS SSN, Type 26)
combat aircraft (Typhoon, GCAP)
armoured vehicles (Bradley, CV90, ACV, BvS10)
missiles (via MBDA)
electronic warfare, space electronics and cyber defence. TechStock²+1

That’s why commentators talk about a “defence super‑cycle” rather than a one‑off spike. But super‑cycles have moods, and equity investors are already looking ahead to a world where tensions could stabilise and budgets flatten, even if they don’t fall.

Key risks investors are watching

Recent analyses highlight several risk factors that help explain why the shares have sold off from the highs even as fundamentals improve: TechStock²+1

Valuation risk
After a 200–300% multi‑year rally and a P/E in the low‑ to mid‑20s, some analysts question how much of the boom in orders is already priced in, especially with defence still a politically sensitive sector.
Budget and political risk
A prolonged U.S. government shutdown, shifts in Washington’s priorities, or European political pressure to trim spending could slow order growth or delay funding. BAE itself has warned about shutdown‑related timing risk, even while saying no material impact has been felt yet. ^[35]
Competition and technology disruption
In fields like autonomous underwater vehicles, uncrewed aircraft and AI‑enabled command systems, BAE faces fast‑moving defence tech companies and start‑ups. That could curb margins in some segments if traditional primes can’t match the pace of innovation. TechStock²+1
Programme execution risk
Huge, multi‑decade programmes – GCAP, AUKUS submarines, complex land systems – always carry a risk of cost overruns, delays and renegotiations. Any high‑profile mis‑step could hit profitability and the share price.

So where does BAE Systems stock stand now?

Putting all the moving parts together as of 4 December 2025:

The share price has corrected around 20% from October’s highs but is still up strongly over 1‑ and 5‑year horizons. ^[36]
The order book is near record levels, with contracts stacking up in artillery ammunition, armoured vehicles, naval missile systems, satellites and cyber solutions. ^[37]
Management is guiding to high single‑digit to low double‑digit growth in sales, EBIT and EPS this year, with free cash flow north of £1.1bn and about £1.5bn in cash returns to shareholders. TechStock²+1
The dividend yield is modest but growing, underpinned by a long track record of progressive payouts and a solid credit rating. ^[38]
Analysts broadly lean bullish, with average price targets roughly 25–35% above current levels, but with a growing chorus arguing that long‑term returns from here are likely to be more moderate than the last five years. ^[39]

For potential investors, the decision now is less about whether BAE is a high‑quality, strategically important defence prime – that’s close to consensus – and more about whether today’s price fairly reflects a long runway of earnings visibility set against political, budgetary and execution risk.