In key news on UK stocks, BAE Systems PLC (GB:BA) released its year-to-date trading update, highlighting its growth prospects amid the increased defence spending by Western countries. The company stated that its Q1 performance remained in line with expectations and also confirmed its guidance for the full-year Fiscal 2024. BAE stock gained 0.94% as of writing. Year-to-date, the stock is trading up by 25%.
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BAE Systems is scheduled to release its interim results for 2024 on August 1, 2024.
BAE Systems is a British aerospace and defence company with operations spanning approximately 40 countries worldwide.
Defence Spending Lifts BAE’s Prospects
Bae Systems is optimistic about higher defence spending in the U.S. and the UK, which will boost its top line. The recent allocation of a $61 billion supplemental aid package for Ukraine by the U.S. and the UK government’s pledge to allocate 2.5% of GDP by 2030 to defence will contribute to higher revenues.
Additionally, the company’s global presence increases its exposure to additional growth markets. In March 2024, the Australian government chose BAE Systems and ASC Pty Ltd. to construct Australia’s new fleet of nuclear-powered submarines. This is part of the AUKUS trilateral security partnership between the U.S., Australia, and the UK. The company believes that any additional expansion of the AUKUS program will further enhance its long-term opportunity pipeline.
In 2023, BAE Systems’ order book increased to £58 billion from £48.9 billion in 2022. Meanwhile, the order backlog surged to £69.8 billion last year from £58.9 billion in 2022.
BAE’s 2024 Guidance
For the full year, Bae Systems expects around 10%-12% increase in sales. In 2023, the company reported total sales of £25.3 billion. For underlying EBIT, the company is expecting 11%-13% growth in 2024, up from £2.7 billion reported in 2023. Additionally, free cash flow for 2024 is anticipated to be more than £1.3 billion.
Is Bae Systems a Good Stock to Buy?
According to TipRanks, BA stock has received a Moderate Buy consensus rating based on 10 recommendations, of which five are Buys. The BAE share price target is 1,397.59p, which is similar to the current trading levels.
