Updated: 2 December 2025
BAE Systems at the start of December 2025
BAE Systems plc (LSE: BA., also traded as BAES on some platforms and BAESY/BAESF in the U.S.) remains one of the standout defence stocks of the last few years. The company sits at the centre of a global rearmament cycle, with record order books, a growing footprint in space and electronics, and fresh contracts landing across the U.S., Europe and India.
As of trading on 2 December 2025, BAE Systems’ London‑listed shares are changing hands at around 1,606p, slightly down on the day and roughly 22% below their 52‑week high of 2,071p. Over the last year, the stock has traded between about 1,128p and 2,071p. [1]
Despite the recent pull‑back, the broader run has been powerful: by mid‑November the shares were up about 57% year‑to‑date, with several analyses noting a multi‑year gain of more than 200% as defence budgets surged and BAE’s backlog hit repeated records. [2]
Against that backdrop, investors now want to know whether today’s lower price is a buying opportunity, a pause before another leg higher, or the start of a more extended cooling. The answer depends on how you weigh new contract wins, upgraded guidance and strong cash flow against a richer valuation and political risk.
BAE Systems share price on 2 December 2025
On 2 December 2025, BAE Systems is trading around 1,606p, down about 0.2% on the session according to real‑time London data. [3]
Key near‑term points for the share price:
- Short‑term pull‑back: The stock dropped nearly 3% on 1 December, when UK mid‑cap and defence shares sold off on headlines suggesting progress towards a potential Ukraine ceasefire and a shift out of defence names. [4]
- Still a major winner over 2025: Even after that move, BAE remains one of the FTSE 100’s strongest performers this year, with double‑digit returns comfortably ahead of the wider index. [5]
- Trading well below the peak: Today’s level leaves the shares about 22% below the 2,071p high reached earlier in 2025, based on the current price and 52‑week range. [6]
For investors, that combination – big gains over 12–24 months but a meaningful pull‑back from the peak – is at the heart of the BAE Systems stock debate going into 2026.
New contracts and strategic deals in late 2025
The most important new information for BAE Systems shareholders in November–December 2025 is not the day‑to‑day share price noise but the contract flow. Here, the picture remains unequivocally strong.
1. Fresh U.S. Army and Marine Corps vehicle orders
Bradley A4 infantry fighting vehicles – c. $390m+
On 1 December 2025, BAE Systems Land & Armaments secured a contract modification valued at more than $390 million to produce additional Bradley A4 infantry fighting vehicles for the U.S. Army. Work is already underway, with deliveries scheduled to start by October 2026 and production running through late 2027 across multiple U.S. facilities, including York (PA), Aiken (SC), Anniston (AL), Minneapolis (MN), San Jose (CA) and Sterling Heights (MI), in partnership with Red River Army Depot in Texas. [7]
The A4 upgrade brings improved mobility, more robust power and electrical architecture, and fully digitised electronics, strengthening BAE’s position in U.S. armoured vehicles for the coming decade. [8]
Amphibious combat vehicles – $184.4m modification
Separately, BAE Systems has received a $184.4 million modification to an existing amphibious combat vehicle (ACV) contract for the U.S. Marine Corps. The change adds procurement of 30 ACV medium‑calibre cannon mission‑role variants plus associated production and support work, and lifts the total potential value of the broader programme to about $3.86 billion, with completion expected by March 2028. [9]
Together, the Bradley and ACV awards reinforce a core part of the BAE Systems equity story: sticky, multi‑year U.S. ground‑vehicle programmes that underpin long‑term revenue visibility.
2. European and Indian land‑systems momentum
Denmark – 44 extra CV90s
In late November, BAE Systems confirmed a $450 million deal to supply 44 additional CV90 MkIIIC infantry fighting vehicles (IFVs) to Denmark. [10]
Including a 2024 contract for 115 CV90s, Denmark’s future fleet will rise to 159 vehicles, with deliveries planned between 2027 and 2030. [11]
The order replaces a previously planned mid‑life upgrade of older CV90s and standardises on a modern configuration, which should increase aftermarket and support revenues for BAE over time. [12]
India – BvS10 “Sindhu” all‑terrain vehicles
On 19 November 2025, BAE Systems Hägglunds and Indian conglomerate Larsen & Toubro (L&T) announced that the Indian Army has chosen the BvS10 “Sindhu” articulated all‑terrain vehicle. The initial contract covers 18 vehicles manufactured under licence by L&T, with BAE providing design and technical support. [13]
The “Sindhu” variant has been tailored for India’s demanding mix of high‑altitude, desert, marshland and amphibious environments, and marks the first BvS10 deployment in Asia. [14]
Strategically, this is important for two reasons:
- It embeds BAE Systems into India’s “Make in India” defence industrial strategy.
- It positions the company for follow‑on orders in tracked and all‑terrain vehicles across the Indo‑Pacific.
3. Naval and space‑electronics contracts
Mk 41 Vertical Launch System canisters
On 25 November 2025, BAE Systems’ U.S. arm announced a $22 million contract from the U.S. Navy to produce missile canisters for the Mk 41 Vertical Launching System (VLS), with options that could take the total to $317 million if fully exercised. [15]
The contract follows a much larger $738 million Mk 41 canister award announced in July, highlighting BAE’s entrenched role in supplying canisters for Tomahawk, Standard Missile variants, ESSM and ASROC missiles used by the U.S. and allied navies. [16]
Radiation‑hardened chips with GlobalFoundries
In parallel, BAE Systems and GlobalFoundries (GF) announced a collaboration to produce radiation‑hardened 12‑nanometre chips for space applications. The partnership combines GF’s 12LP FinFET manufacturing process at its DMEA‑accredited Malta, New York fab with BAE’s RH12 “Storefront” radiation‑hardening technology, creating a turnkey U.S.‑based supply chain for space‑grade semiconductors. [17]
Although revenue contributions from these chips will be modest near‑term, the deal strengthens BAE Systems’ positioning in high‑margin space electronics – a key strategic focus after its acquisition of Ball Aerospace in early 2024. [18]
Financial performance: from 2024 records to 2025 guidance
Record 2024 results
BAE Systems entered 2025 from a position of unusual strength:
- 2024 sales: £28.3 billion, up 14% year‑on‑year. [19]
- Underlying EBIT: £3.0 billion, also up 14%. [20]
- Underlying EPS: 68.5p, a 10% increase. [21]
- Free cash flow: £2.5 billion. [22]
- Order backlog: £77.8 billion, up from £69.8 billion a year earlier, reflecting strong order intake of £33.7 billion. [23]
Those numbers were driven by higher defence budgets in response to the Ukraine war and major programme wins across submarines, munitions and combat aircraft, with the newly acquired Ball Aerospace business boosting the U.S. space and mission systems segment. [24]
Strong first half of 2025
Interim results for the six months to 30 June 2025 confirmed that momentum had continued:
- Sales: £14.6 billion, up 11% versus the first half of 2024.
- Underlying EBIT: £1.55 billion, up 13%.
- Underlying EPS: 34.7p, up 12%.
- Order intake: £13.2 billion (vs £15.1 billion in H1 2024).
- Order backlog: £75.4 billion, only slightly below the year‑end record as orders converted to revenue. [25]
Trading update and 2025 guidance (12 November 2025)
In a market update on 12 November 2025, BAE Systems reiterated its upgraded full‑year guidance for 2025: [26]
- Sales growth: +8% to +10% versus 2024.
- Underlying EBIT growth: +9% to +11%.
- Underlying EPS growth: +8% to +10%.
- Free cash flow: expected to exceed £1.1 billion, with consensus around £1.5 billion. [27]
- Order intake: more than £27 billion booked year‑to‑date by mid‑November, with further deals expected before year‑end. [28]
- Shareholder returns: around £1.5 billion to be returned to shareholders in 2025 through ordinary dividends and share buybacks. [29]
Management also noted that a potential prolonged U.S. federal government shutdown could delay some contract funding and payments, but reported no material impact so far. [30]
Taken together, the numbers point to a company delivering high single‑ to low double‑digit growth on a very large revenue base, while still converting a healthy share of earnings into free cash and maintaining a sizeable buyback alongside a progressive dividend.
Analyst forecasts for BAE Systems stock in 2026
Consensus 12‑month price targets
Analyst forecasts remain broadly positive going into 2026.
On Investing.com’s consensus page for BAE Systems (ticker BAES), 18 analysts currently cover the stock. The aggregated view is: [31]
- Consensus rating: Buy (14 Buy, 4 Hold, 2 Sell).
- Average 12‑month price target:2,120.67p.
- Target range: 1,370p (low) to 2,500p (high).
- Implied upside: about 32% from the current price near 1,606p.
Other sources show similar, if slightly lower, expectations:
- MarketBeat’s compilation of five broker targets shows an average of around 1,997p, implying mid‑20s percentage upside from a base near 1,610p. [32]
- A TipRanks snapshot suggests an average target just above 2,090p, with roughly 27% upside from prices in the mid‑1,600s at the time of that survey. [33]
- TradingView’s aggregate forecast points to an average near 2,050p, with a range of 1,540p–2,500p. [34]
For the U.S.‑listed ADR BAESY, Zacks Investment Research cites one short‑term target of $125.60, around 47% above a recent closing price near $85.71. [35]
Growth and profitability expectations
Independent models that aggregate analyst forecasts, such as Simply Wall St’s “Future Growth” section, estimate that BAE Systems could deliver: TS2 Tech+1
- Revenue growth: roughly 8% per year over the next few years.
- Earnings and EPS growth: in the low double digits annually.
- Return on equity: moving towards the high‑teens percentage range.
These forecasts are slightly slower than some higher‑growth defence and aerospace peers but comfortably ahead of typical developed‑market bond yields, underpinning the investment case as a “defensive growth” stock.
Valuation: premium price tag on a defensive franchise
Multiples versus history
Hargreaves Lansdown’s latest research on BAE Systems, published alongside the November trading update, highlights how the market has re‑rated the stock: [36]
- Forward price/earnings ratio (next 12 months): about 21.8×.
- 10‑year average forward P/E: about 14.0×.
- Prospective dividend yield: approximately 2.2%.
- 10‑year average dividend yield: about 3.8%.
In other words:
- Investors are paying a significant premium to BAE’s historical earnings multiple.
- The income yield is lower than usual because the share price has risen faster than the dividend, even though the dividend itself has been increased for more than two decades. [37]
Some independent valuations, such as those published on TIKR and highlighted in recent commentary, suggest that if revenue grows in the high single digits and net margins hold around low‑double‑digit levels, BAE Systems could still generate respectable – but not spectacular – shareholder returns from today’s price, in the mid‑single‑digit annual range over a five‑year horizon. [38]
Balance sheet and credit ratings
BAE Systems’ balance sheet has been stretched by the $5.5–5.6 billion acquisition of Ball Aerospace, financed partly with a large U.S. bond issuance in 2024. [39]
However, rating agencies have responded positively:
- Fitch Ratings upgraded the company’s long‑term foreign‑currency rating to A‑ with a Stable Outlook in May 2025, citing strong free‑cash‑flow (FCF) margins and expectations of at least 4% FCF margin in 2025–26, rising above 5% thereafter. [40]
- S&P Global Ratings has also highlighted improving leverage metrics as the Ball acquisition is digested. [41]
This supports management’s ability to keep funding long‑cycle programmes while maintaining dividends and selective buybacks.
Strategic position: where BAE Systems makes its money
BAE Systems is now as much a U.S. company as a UK one in revenue terms. According to recent company and market data: [42]
- Around half of sales come from the United States.
- The United Kingdom contributes a little over a quarter.
- Saudi Arabia, Australia and wider Europe make up most of the remainder.
Key programme pillars include:
- Submarines and surface ships (Astute, Dreadnought, Type 26, Hunter‑class).
- Combat air (Eurofighter Typhoon, F‑35 components, and the UK‑Japan‑Italy Global Combat Air Programme). [43]
- Land systems (CV90, Bradley, BvS10, artillery and munitions). [44]
- Electronic systems and space (radars, electronic warfare, space payloads, and radiation‑hardened chips). [45]
The result is a portfolio that closely matches NATO and allied spending priorities: undersea deterrence, advanced air and missile defence, armoured vehicles, and electronic and space capabilities.
Key risks investors are watching
Despite strong fundamentals, several risk factors are front of mind for investors in BAE Systems as 2025 closes.
1. Valuation and expectations
With the shares trading on a forward P/E in the low‑20s versus a long‑run average around the mid‑teens, some analysts worry that a lot of the “defence super‑cycle” is already reflected in the price. [46]
Recent director share sales, highlighted in financial press coverage, have also drawn attention to how far the shares have run, even if such disposals are often driven by personal diversification rather than a fundamental call on the business. [47]
2. Budget and political risk
BAE Systems is highly exposed to public‑sector defence budgets:
- A prolonged U.S. government shutdown could delay funding and payments on some programmes. Management has already warned of this possibility, even while saying that it has not yet had a material impact. [48]
- European and UK governments could, in future, slow the pace of defence spending increases if geopolitical tensions ease faster than expected or fiscal pressures intensify. [49]
In the near term, however, NATO members are generally moving towards or above 2% of GDP on defence, and some long‑term planning documents point even higher, which supports BAE’s multi‑decade programmes. [50]
3. Technology and competition
In newer domains like autonomous underwater vehicles, AI‑enabled defence systems and cyber‑electronic warfare, BAE Systems faces nimble competitors ranging from U.S. primes to start‑ups. Reporting on the emerging “submarine drone” race, for example, has highlighted how BAE’s Herne uncrewed underwater vehicle competes with systems from defence tech companies such as Anduril. TS2 Tech
These challengers claim to move faster and cheaper than traditional primes, which could pressure margins in some segments if procurement models change.
4. Programme execution risk
Complex, multi‑billion programmes like AUKUS submarines, next‑generation fighter jets and advanced land systems carry non‑trivial execution risk. Cost overruns, delays or technical problems can erode profitability or lead to contract renegotiations. [51]
BAE’s track record is generally solid, but at current valuations the market is not pricing in much room for mis‑steps.
BAE Systems stock outlook: what 2 December 2025 means for investors
Putting the pieces together, the BAE Systems investment picture at the start of December 2025 looks like this:
- Operationally: The company is executing well, with upgraded 2025 guidance, double‑digit underlying earnings growth, and a near‑record order backlog around the mid‑£70‑billion level. [52]
- News flow: New contracts for Bradley A4 vehicles, amphibious combat vehicles, CV90s, BvS10 “Sindhu” all‑terrain vehicles, Mk 41 VLS canisters and space‑grade chips show BAE Systems deepening its role in key U.S., European and Indo‑Pacific programmes. [53]
- Market view: The analyst community remains broadly bullish, with most 12‑month price targets clustered in the 2,000–2,150p range, implying 20–30% upside from current levels, albeit with a wide range of outcomes depending on macro and political developments. [54]
- Valuation: The stock trades at a premium to its own history and offers a modest but growing dividend yield just above 2%, backed by healthy free‑cash‑flow generation and recently upgraded credit ratings. [55]
For potential and existing shareholders, the core trade‑off is straightforward:
- Bullish case: BAE Systems is a high‑quality defence prime with a geographically diversified base, record visibility on future revenue, growing exposure to space and electronics, and a shareholder‑friendly capital‑return policy. If defence budgets remain elevated and the company continues to execute, the current pull‑back could offer attractive long‑term entry points. [56]
- Cautious case: After a 200–300% multi‑year rally, a P/E in the 20s and high expectations across the analyst community, annualised returns from here may moderate, especially if peace efforts accelerate, political sentiment turns against higher defence spending, or large programmes encounter delays and cost pressure. [57]
References
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