London, Jan 23, 2026, 09:08 GMT — Regular session
- Shares gained roughly 1.4% in early trading, rebounding from Thursday’s steep decline
- UK hands £453.5 million contract for Typhoon radar production, with BAE involved
- Full-year results set for Feb. 18; investors will zero in on guidance and margins
BAE Systems shares climbed roughly 1.4% in early London trade on Friday, recovering some losses from the previous day amid investor reactions to new UK defence spending cues. (Investing)
The move is significant as defence stocks have surged early in the new year, leaving traders uneasy about what’s already factored in before earnings season. Securing a contract win provides a boost, but it also puts a spotlight on delivery schedules, profit margins, and the order pipeline.
Britain has handed a £453.5 million contract to BAE Systems, Leonardo UK, and Parker Meggitt to produce and supply 40 Eurofighter Common Radar System (ECRS) Mk2 AESA radars for the RAF’s Typhoon jets. Deliveries are expected later this decade. Defence Secretary John Healey described the Typhoon fleet as “the backbone” of UK and NATO air defence. Richard Hamilton of BAE called the investment in capability “crucial.” (Defence Equipment & Support)
BAE dropped 3.7% on Thursday, closing at 1,985 pence. The stock lagged behind a stronger overall market and remains roughly 8% below its 52-week peak reached on Jan. 19. (MarketWatch)
The selloff appeared to be profit-taking following a strong rally: European defence stocks have jumped this month as investors wager on increased spending and expanding order books. Still, some analysts warn valuations may be stretched. (Financial Times)
Friday’s bounce keeps BAE squarely in the thick of the debate — will demand hold up to support the recent re-rating, or will execution risks begin to weigh in 2026?
The UK government is pitching defence deals as a key part of its economic strategy, highlighting an £8 billion Typhoon export deal with Turkey and plans to boost defence spending to 2.6% of GDP starting in 2027. The latest Typhoon radar contract comes after a separate £205 million support agreement struck earlier this week. Meanwhile, a delayed defence investment plan aims to resolve a separate helicopter competition. (Reuters)
Investors are focusing on BAE’s own figures for clear insights into cash flow and margin trends, especially in segments where programs risk delays or unexpected cost spikes.
The main risk is clear: delivery schedules stretch out, government strategies can shift, and even a slight note of caution might hit hard after the recent jump in the stock price.
BAE’s full-year results are due Feb. 18. The company is set to reveal its 2026 outlook and provide updates on orders and programme execution. (BAE Systems Investors)
