BAE Systems plc (LSE: BA.) entered December 2025 trading at roughly 1,612p per share, down about 2–2.5% on the day but still more than 30% higher than a year ago and over 200% above its level five years ago. [1]
The shares are pausing after a powerful multi‑year rally, just as the company secures another major U.S. Army contract, reiterates upgraded 2025 guidance and remains a core way for investors to play the global defence spending boom.
Below is a structured look at the latest news, forecasts and analysis as of 1 December 2025.
BAE Systems share price today (1 December 2025)
On 1 December 2025, BAE Systems traded around 1,612p in London. Google Finance and the Financial Times both show: [2]
- Last trade: ~1,612p
- Previous close: 1,650.5p
- Intraday range: about 1,607.5p–1,632.5p
- Market cap: roughly £48–49 billion
- 52‑week range: 1,127p (6 January 2025) to 2,073p (1 October 2025)
Hargreaves Lansdown data point to a price/earnings ratio around 24 and a historic dividend yield of about 2.0–2.1%, with the shares up roughly 28–31% over the last 12 months and about 227% over five years. [3]
In index terms, BAE underperformed the wider market at the open: a TradingView/Trading Economics snapshot reports the FTSE 100 down around 0.2%, with BAE Systems among the laggards, off about 1.9% in early trade. [4]
Net result: the stock sits roughly 43% above its January low, but still about 22% below its October high, leaving room on either side for bullish “catch‑up” or bearish “mean reversion” narratives.
Fresh headline: new $390m Bradley A4 contract from the U.S. Army
The biggest new BAE Systems stock catalyst hitting the tape on 1 December 2025 is confirmation of another substantial U.S. Army vehicle award.
A GovConWire report details that BAE Systems Land & Armaments has received a contract modification worth more than $390 million to produce additional Bradley A4 infantry fighting vehicles for the U.S. Army. [5]
Key points from that award:
- The deal supports the Army’s multi‑year programme to replace older Bradley variants with the A4 configuration, which brings upgraded powertrain components, fully digitised electronics, and improvements in mobility, lethality and protection. [6]
- Work is spread across BAE facilities in York (Pennsylvania), Aiken (South Carolina), Anniston (Alabama), Minneapolis (Minnesota), San Jose (California) and Sterling Heights (Michigan), in partnership with Red River Army Depot in Texas. [7]
- First deliveries are scheduled by October 2026, with production running through late 2027, adding multi‑year visibility to the U.S. combat vehicle business. [8]
Multiple outlets, including PR‑style releases on Morningstar, Investing.com and specialist defence sites, have highlighted this Bradley A4 award as part of a pattern of recent U.S. ground‑vehicle funding for BAE Systems. [9]
For the equity story, the Bradley A4 contract reinforces three themes:
- Order book durability: it extends an already large backlog of armoured vehicle work.
- Political resilience: manufacturing spread across multiple U.S. states makes the programme attractive to lawmakers, often helping funding survive budget wrangles. TechStock²
- Incremental upgrades over “big bang” replacements: armies are still pouring money into heavily modernised legacy platforms rather than only betting on unproven next‑generation designs.
Order momentum across Europe, India and space
The Bradley award is only one piece of a broader November–December news flow that has underpinned BAE Systems’ narrative.
A detailed roundup from TechStock² (TS2) on 28 November 2025 pulls together several noteworthy developments: TechStock²
- European land systems – CV90 family
- Denmark has ordered 44 additional CV90 infantry fighting vehicles, taking its future CV90 fleet to 159 vehicles under a deal worth around $450 million including support and training. Deliveries run to 2030, reinforcing long‑dated revenue and aftermarket support. TechStock²
- Six European countries – Sweden, Norway, Finland, Lithuania, Estonia and the Netherlands – signed a framework to coordinate assessment, development and future acquisition of the CV90, aiming for shared upgrades and logistics efficiencies. TechStock²
- India – BvS10 “Sindhu” all‑terrain vehicle
- India has signed a contract for the BvS10 “Sindhu” articulated all‑terrain vehicle, built locally by Larsen & Toubro under licence from BAE Systems Hägglunds, with BAE providing design and technical support. The deal includes lifecycle support, and marks the platform’s first deployment in Asia, using the “Make in India” framework. TechStock²
- Naval systems – Mk 41 Vertical Launch System canisters
- BAE announced a $22 million contract for Mk 41 VLS missile canisters, with options that could lift the total to $317 million. The award follows a much larger July contract for the same family of launchers, cementing BAE’s status in high‑specialisation naval subsystems where repeat orders are common. TechStock²
- Space electronics – tie‑up with GlobalFoundries
- BAE will use GlobalFoundries’ 12nm FinFET process at its Malta, New York fab to build radiation‑hardened chips for space as part of the RH12 Storefront platform. This is about future‑proofing BAE’s presence in high‑margin space electronics, rather than near‑term revenue. TechStock²+1
Collectively, these deals show BAE Systems extending its reach in European armoured vehicles, Indo‑Pacific land systems, U.S. naval missiles and space‑grade semiconductors – all areas of strategic interest for NATO and allied governments.
Trading update: upgraded 2025 guidance still intact
On 12 November 2025, BAE issued a trading update which has become the anchor for most recent equity research coverage.
A Reuters‑linked summary on Investing.com shows that management reaffirmed the upgraded full‑year guidance first raised in July, highlighting continued momentum in orders and execution. [10]
Headline guidance for 2025 remains:
- Sales growth: +8% to +10% versus 2024 sales of £28.3 billion
- Underlying EBIT growth: +9% to +11% from a 2024 base of £3.0 billion
- Underlying EPS growth: +8% to +10% from 68.5p
- Free cash flow:>£1.1 billion expected
- Cash returns: around £1.5 billion to be returned to shareholders in 2025 via ordinary dividends and a £500 million buyback. [11]
The same update noted:
- Order intake surpassing £27 billion year‑to‑date, including roughly £4 billion for 20 Typhoon aircraft and weapons integration for Türkiye, $3.3 billion in electronic systems programmes, $1.7 billion for U.S. combat vehicles, £1.1 billion via MBDA missile orders and £0.9 billion for the Dreadnought submarine programme. [12]
- The order book is around £75 billion, close to record levels, providing multi‑year revenue visibility. TechStock²+1
Management did flag one macro risk: a prolonged U.S. federal government shutdown could delay contract funding and payments to BAE’s American operations, although no material impact has been felt so far. [13]
Preliminary full‑year 2025 results are scheduled for 18 February 2026, a key upcoming catalyst for the stock. [14]
Analyst forecasts: consensus still bullish, but expectations trimmed
Data from Investing.com’s BAE Systems price target page provide perhaps the clearest real‑time snapshot of the analyst view. [15]
As of 1 December 2025:
- 18 analysts cover the stock.
- The consensus rating is “Buy” (14 Buy, 4 Hold, 2 Sell).
- The average 12‑month price target is 2,120.67p, with a high of 2,500p and a low of 1,370p.
- From the current price near 1,612p, that implies upside of about 32% (Investing.com calculates +31.56%).
Notably, a recent Yahoo Finance/Simply Wall St‑linked piece pointed out that the consensus target has been nudged down only slightly, from about £21.35 to £21.21, essentially a fine‑tuning rather than a downgrade of the investment case. [16]
For the U.S.‑traded ADR BAESY, MarketWatch data (via earlier snippets) suggest a somewhat more cautious stance, with an average target in the low $100s and an overall “Hold” tilt, reflecting a different investor base and currency exposure. [17]
Growth forecasts
Simply Wall St’s “Future Growth” model aggregates sell‑side forecasts for revenue and earnings. As of 27 November 2025, it estimates that BAE Systems is: [18]
- Earnings growth: ~11.2% per year over the next few years
- Revenue growth: ~8.1% per year
- EPS growth: ~11.6% per year
- Return on equity (ROE): expected to be about 18.7% in three years
Those numbers are slightly slower than the broader aerospace & defence sector (where earnings growth is projected around 15% per year), but comfortably above developed‑market “risk‑free” or savings rates. [19]
The takeaway: analysts broadly see solid, mid‑teens‑ish earnings compounding, but not the kind of hyper‑growth that would normally justify much higher multiples.
Independent valuation views: from “undervalued wide moat” to “premium, modest upside”
Different research houses frame BAE Systems’ valuation in different ways.
- Morningstar: In a late‑November update on European defence stocks, Morningstar highlighted BAE Systems as a “wide moat” company with a positive star rating, implying the stock still trades below the firm’s internal fair value estimate despite the sharp run‑up. [20]
- TIKR valuation case: A detailed TIKR.com analysis (27 October 2025) notes that BAE Systems’ share price has risen more than 300% over the last five years, supported by a backlog approaching £75 billion (over eight times annual sales) and strong positions on multi‑decade programmes. [21]
- Using assumptions of 7% annual revenue growth, 11% net margins and a 20x P/E, their base‑case model projects the stock rising from £18.62 to about £22.66 by late 2029–2030.
- That equates to a mid‑single‑digit annualised return, which TIKR characterises as respectable but not spectacular given the defence and geopolitical risks. [22]
- Motley Fool UK: One recent commentary argued that the BAE share price could climb about 20% to around £20.55, citing broker targets and the ongoing boom in defence spending. Another, more cautious piece noted that BAE Systems shares fell around 6% in November, asking whether this might mark the start of a longer‑term cooling after a big rally. [23]
Broadly, the valuation debate breaks into two camps:
- Bullish camp: argues that premium multiples are justified by record order books, NATO rearmament, exposure to submarines, fighters and missiles, and a strong balance sheet (Fitch upgraded BAE’s credit rating to A‑ with a Stable Outlook in May 2025, citing robust free‑cash‑flow generation). [24]
- Cautious camp: worries that after a 200–300% multi‑year run, annualised returns may moderate, particularly if defence budgets normalise or peace deals reduce perceived threat levels faster than expected. [25]
Defence spending super‑cycle: drones, submarines and undersea “battle networks”
The macro backdrop for BAE Systems remains dominated by elevated and rising defence budgets across NATO, Europe, the U.S. and parts of the Indo‑Pacific.
- The UK government has signalled a path towards higher defence spending as a share of GDP, while many NATO members continue working towards or beyond the 2% of GDP target. [26]
- The U.S. defence budget for the mid‑2020s sits near the $1 trillion mark, with particular focus on next‑generation air defence, submarines, electronic warfare and space. [27]
Within that context, BAE’s portfolio aligns closely with priority programmes: SSN‑AUKUS nuclear submarines, Type 26 frigates, Typhoon and next‑generation air combat projects, CV90 and Bradley armoured vehicles, missile systems via MBDA, and space / cyber‑electronic capabilities. [28]
A particularly striking illustration of the future opportunity comes from the undersea domain. A Guardian feature from 28 November 2025 describes an emerging “submarine drone” race, where BAE Systems – with its Herne uncrewed underwater vehicle – competes alongside U.S. giants and defence tech start‑ups such as Anduril and Helsing to supply autonomous systems that protect cables, track submarines and monitor chokepoints like the GIUK gap. [29]
For BAE Systems’ equity story, this undersea race matters because:
- It opens a new product category adjacent to BAE’s existing submarine and sonar expertise.
- It reinforces the argument that BAE is not just a “metal‑basher” but a systems integrator and electronics company, particularly as autonomous, networked systems become central to future war‑fighting concepts. [30]
Events and investor relations milestones
A couple of near‑term events and IR datapoints are worth flagging:
- EDEX 2025 (Cairo, 1–4 December) – BAE Systems is exhibiting at the Egypt Defence Expo, showcasing air, land and maritime capabilities for regional customers. Official event listings from BAE highlight the company’s presence at stand H2‑D26 and its interest in the Middle East and North Africa as a growth market. [31]
- Dividend track record and capital returns – BAE positions itself as a progressive dividend payer with more than two decades of dividend growth and a policy of around 2x earnings cover; the interim dividend for 2025 was raised again, and total 2025 cash returns to shareholders are expected to hit about £1.5 billion via dividends and buybacks. [32]
- Credit quality – Fitch’s A‑ rating with Stable Outlook underscores improved free‑cash‑flow margins (expected to stay at or above 4–5% through 2026) and manageable leverage, providing flexibility to keep investing in programmes while maintaining shareholder returns. [33]
These factors reinforce BAE’s pitch as a defensive growth stock: part structural growth (defence super‑cycle, long contracts) and part income (modest but growing dividend).
Key risks investors are watching
Despite the good news, recent commentary has highlighted several risk factors that could shape BAE Systems’ share price from here:
- Valuation risk
- With a P/E in the mid‑20s and the stock already up 200–300% over five years, some analysts question how much of the defence “super‑cycle” is already priced in, especially after a year where the shares briefly approached 2,073p before pulling back. [34]
- Budget and political risk
- A prolonged U.S. government shutdown, shifts in U.S. defence priorities, or European political pressure to trim budgets could slow order growth or delay funding, as BAE itself has cautioned. [35]
- Competition and technology disruption
- In emerging fields like autonomous underwater vehicles and AI‑enabled defence systems, BAE faces nimble new entrants. The Guardian piece emphasises that start‑ups claim they can move faster and cheaper than traditional primes, which could pressure margins in some segments. [36]
- Programme execution
- Multi‑billion, multi‑decade projects (AUKUS submarines, next‑generation combat aircraft, complex land systems) carry execution and cost‑overrun risk; any major mis‑step can erode profitability or lead to contract renegotiations. [37]
These risks help explain why some independent valuation work (such as TIKR’s base‑case) assumes only mid‑single‑digit annual returns from today’s price, even while acknowledging very strong fundamentals. [38]
Bottom line: how BAE Systems stock looks at the start of December 2025
As of 1 December 2025, the BAE Systems investment picture looks something like this:
- Fundamentals: upgraded 2025 guidance, a near‑record order book, double‑digit expected earnings growth and robust cash returns to shareholders. [39]
- News flow: a fresh $390m+ Bradley A4 contract, multiple European and Indian vehicle deals, ongoing missile and space‑electronics contracts, and prominent positioning in new domains like undersea drones. [40]
- Market view: a strong “Buy” consensus with an average target about 30% above today’s price, but with some recent trimming of those targets as investors debate how much upside is left after a spectacular multi‑year run. [41]
- Valuation: P/E in the mid‑20s, dividend yield just above 2%, and external research split between “undervalued wide‑moat compounder” and “quality business at a full price”. [42]
For readers, the core question is not whether BAE Systems is a high‑quality defence franchise – most analysts and credit‑rating agencies now treat that as a given – but whether today’s share price appropriately balances long‑term earnings visibility against valuation, political and execution risks.
References
1. markets.ft.com, 2. www.google.com, 3. www.hl.co.uk, 4. www.tradingview.com, 5. www.govconwire.com, 6. www.govconwire.com, 7. www.govconwire.com, 8. www.govconwire.com, 9. www.morningstar.com, 10. www.investing.com, 11. www.investing.com, 12. www.investing.com, 13. www.investing.com, 14. www.investing.com, 15. in.investing.com, 16. finance.yahoo.com, 17. www.marketwatch.com, 18. simplywall.st, 19. simplywall.st, 20. global.morningstar.com, 21. www.tikr.com, 22. www.tikr.com, 23. www.fool.co.uk, 24. www.fitchratings.com, 25. www.tikr.com, 26. global.morningstar.com, 27. www.tikr.com, 28. www.tikr.com, 29. www.theguardian.com, 30. www.theguardian.com, 31. www.baesystems.com, 32. investors.baesystems.com, 33. www.fitchratings.com, 34. www.hl.co.uk, 35. www.investing.com, 36. www.theguardian.com, 37. www.tikr.com, 38. www.tikr.com, 39. www.investing.com, 40. www.govconwire.com, 41. in.investing.com, 42. www.hl.co.uk
