Shares in BAE Systems (LON:BA) have jumped in London this morning as the British defence contractor secured a near £20-billion deal to build warships in Australia. Reuters reports that the blue-chip group beat Italy’s Fincantieri SpA and Spain’s Navantia SA for the contract.
As of 08:44 BST, BAE Systems’ share price had added 2.63 percent to 648.60p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 1.01 percent higher at 7,692.43 points. The group’s shares have added nearly two percent to their value over the past year, as compared with about a 4.7-percent gain in the Footsie.
BAE Systems secures Australian contract
BAE Systems announced in a statement today that the Australian government had selected the company as the preferred tenderer to deliver its nine ship Future Frigate programme for the country’s Royal Navy. The overall announced programme is expected to be in the region of AUD $35 billion (around £19.7 billion) for the design, build and support of the ships.
The company is set to start negotiations with Australia’s Department of Defence on the initial design part of the contract, which is expected to be in place by the year end, while production of the first ship is expected to start in early 2020s in South Australia.
Analysts on British defence group
The 18 analysts offering 12-month price targets for BAE Systems for the Financial Times have a median target of 700.00p on the shares, with a high estimate of 813.00p and a low estimate of 480.00p. As of June 22, the consensus forecast amongst 21 polled investment analysts covering the blue-chip group has it that the company will outperform the market.
BAE Systems is scheduled to update investors on its half-year performance on August 1.