BAE Systems share price up as Goldman Sachs adds group to ‘Conviction List’

on Jul 4, 2016
Updated: Mar 11, 2020

Shares in BAE Systems (LON:BA) have climbed higher this morning, outperforming the broader London market, as analysts at Goldman Sachs added the defence giant to their ‘Conviction List,’ arguing that the outlook for the sector is improving. The comments are a boost for BAE which recently suffered a downgrade at Berenberg which pointed to a potential delay in the production phase of Type 26 Combat Ship which the UK defence giant is currently developing.

As of 10:15 BST, BAE Systems’ share price had inched 0.19 percent higher to stand at 531.00p, outperforming the blue-chip FTSE 100 index which has slipped marginally into the red and is currently 0.01 percent worse off at 6,577.04 points. The group’s shares have gained more than 17 percent over the past year, and are up more than six percent in the year-to-date.
Goldman Sachs, which has a ‘buy’ rating on BAE Systems, added the stock to its ‘Conviction List’ today and lifted its price target on the stock from 599p to 653p. The analysts argue that the defence outlook was improving and the company should enter a phase of per annum organic revenue growth of between four percent and six percent from next year.

“We believe BAE’s product portfolio offers an attractive mix of long-term stability, secular growth and short-term optionality,” the analysts were quoted as saying, as they lifted their earnings estimates. Goldman Sachs further noted that the FTSE 100 group remained inexpensive compared to its aerospace and defence peers while the earnings outlook had been boosted by the drop in sterling versus the dollar following the UK’s vote to leave the European Union.
The comments come ahead of BAE Systems half-year results due out on July 28.
As of 10:54 BST, Monday, 04 July, BAE Systems plc share price is 531.75p.