Shares in BAE Systems (LON:BA) have lost more than one percent in London in today’s session as Berenberg lowered its stance on the British defence contractor, ahead of a trading update next week. The analysts argue that there is little room for growth in the next two years.
As of 13:35 BST, BAE Systems’ share price had given up 1.35 percent to 621.99p, underperforming the broader UK market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.15 percent higher at 7,450.16 points. The group’s shares have added more than 16 percent to their value over the past year, and are up by just under five percent so far in 2017.
Berenberg abandoned its bullish stance on BAE Systems today, downgrading the stock to a ‘hold,’ and trimming its price target on the shares from 700p to 600p. Following a meeting with the management team, the analysts explained that the absence of a firm export order for the company’s Typhoon programme was a key factor in the downgrade.
“This may result in a further slowdown of delivery rates which could generate negative sentiment around BAE’s largest franchise programme,” the broker pointed out, as quoted by Sharecast, adding that while it still saw the UK defence contractor as an ‘attractive’ investment option, its lack of earnings momentum was a significant hamper on its progress in the near future.
The comments come after Qatar recently unveiled plans to purchase 24 Typhoon jets from the UK group. BAE, however, continues to struggle to secure a deal with the Saudi government for a new order of 48 Typhoons.
BAE Systems is scheduled to update investors on its recent trading on October 10.