Proactive Investors - BAE Systems (LON:BAES)’s European businesses should help underpin growth targets over the coming years, according to analysts.
Following BAE’s capital markets day on Thursday, both JP Morgan and Jefferies analysts pointed to the company’s Swedish subsidiaries Hagglunds and Bofors as key for providing future growth.
“We come out of the event comfortable with our above-consensus estimates,” Jefferies said, anticipating a between 4% and 7% rise in 2024 pre-tax earnings.
JP Morgan noted the two businesses should “grow very fast” over the next four years, providing a larger share of the group's sales than the US$500mln, 1.7% contribution penned in 2022.
Hagglunds’ sales of tracked armoured vehicles may well triple by 2026, Jefferies forecast, while the US, UK and Italy have expressed interest in ordering Bofors’ artillery pieces.
Russia’s invasion of Ukraine has sped up the pace of decision-making, marking positive news for defence contractors, the investment bank added.
JP Morgan tipped BAE as ‘overweight’ following Thursday’s meeting, while Jefferies dubbed the company a ‘buy’.
Jefferies offered a share price target of 1,060p, up 11% on Thursday’s close. JP Morgan anticipated a larger jump meanwhile, granting the company a 1,100p price target.