BAE Systems share price: JPMorgan lowers earnings estimates

Analyst point to sterling and Saudi headwinds

BAE Systems share price: JPMorgan lowers earnings estimates

JPMorgan has lowered its earnings per share (EPS) forecasts for BAE Systems’ (LON:BA) for next year, the analysts have said. The comments came as the broker reiterated its ‘neutral’ stance on the British defence giant.

BAE Systems’ share price has been little changed in today’s session, having added 0.22 percent to 622.50p as of 13:48 BST, slightly outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.05 percent lower at 7,271.43 points. The group’s shares have added more than 14 percent to their value over the past year, and are up by just under five percent in the year-to-date.

JPMorgan reiterated its ‘neutral’ rating on BAE Systems today, with a price target of 610p on the shares, while paring its 2018 earnings per share estimates. Sharecast quoted the analysts as telling clients that they believed they had underestimated the headwind from the end of Eurofighter deliveries to Saudi Arabia and were also trying to account for another leg up in sterling.

Of the cumulative nine-percent downward revision to EPS, five percent was the result of lower military aircraft sales and another four percent from stronger sterling.

The comments come with BAE Systems trying to reach a deal with the Saudi government for a new order of 48 Typhoon jets. Earlier this week, Qatar’s defence minister signed a letter of intent to purchase 24 Typhoons from the UK defence giant.  

The 18 analysts offering 12-month price targets for BAE Systems for the Financial Times have a median target of 680.00p on the shares, with a high estimate of 800.00p and a low estimate of 460.00p. As of September 15, the consensus forecast amongst 20 polled investment analysts covering the blue-chip group has it that the company will outperform the market.   

As of 14:11 BST, Wednesday, 20 September, BAE Systems plc share price is 622.50p.

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