LONDON, March 6, 2026, 08:11 GMT
- Berenberg bumped its target on BAE Systems up to 2,300 pence from 2,000, sticking with its hold call. The broker pointed out the stock’s 32% climb since the start of 2026.
- BAE picked up 97,895 shares for cancellation on March 4, as part of its ongoing buyback, paying an average price of 2,237.12 pence each, according to a filing.
- The company just posted its best-ever results for 2025, notching an order backlog of 83.6 billion pounds, and is projecting more growth this year.
BAE Systems settled at 2,150 pence on Thursday, pulling back despite Berenberg lifting its price target and news of further buybacks under the company’s ongoing share repurchase programme.
The decline stings, given BAE’s standing as one of the top-performing European defence names this year. According to Berenberg, shares have gained 32% since the beginning of 2026. Still, the bank stuck with its hold recommendation. It did nudge up its price target to 2,300 pence from 2,000, suggesting only a bit of further upside from here.
Pressure came from across the board. The FTSE 100 slipped to its lowest in three weeks Thursday, dragged down as surging bond yields and a spike in oil prices—triggered by the Middle East conflict—led investors to dial back expectations for a Bank of England rate cut in March.
BAE picked up 97,895 ordinary shares on March 4, paying a volume-weighted average of 2,237.12 pence each, according to a Thursday filing. That pushes the total for the second leg of its buyback up to 18.3 million shares. The shares will be cancelled, the company said.
The broker’s call came a little more than two weeks after BAE, the UK’s top defence group, posted a 12% bump in full-year operating profit, with sales at a record 30.66 billion pounds and orders piling up to 83.6 billion pounds. Chief Executive Charles Woodburn called it a “new era of defence spending” and pointed to faster innovation, driven by increased threats that “fast tracked more than a decade’s worth” of technology change. BAE is looking for 7% to 9% sales growth, and 9% to 11% operating profit growth, by 2026. Reuters
Morgan Stanley, in a note earlier this week, flagged BAE as well positioned should U.S. military outlays pick up, noting that roughly 45% of its revenue comes from the U.S. and close to 10% from the Gulf region. The bank also pointed to Leonardo, Dassault Aviation, and Kongsberg as European players that stand to gain if defence spending ramps up.
Rivals haven’t missed out. Leonardo landed a 1 billion-pound British contract to make 23 medium-lift military helicopters, announced March 2. Over at Thales, air-defence demand gave earnings a boost, according to a March 3 statement. Chief Executive Patrice Caine pointed to the latest Gulf crisis as proof that geopolitics is pushing countries to ramp up security spending.
But it’s not a one-way street. Morgan Stanley pointed out risks tied to logistics, global supply chains, energy prices, and air traffic in the Middle East. Caine put it bluntly: “Nobody knows today how it will evolve.” Slower government orders or a quick reversal in the conflict-fueled rally for defence stocks could make BAE’s next move up tougher to pull off. Sharecast
