BAE Systems Price Target Raised – Analyst See’s 15% Upside From Here

BAE Systems shares (LON:BA) have been a strong outperformer on the LSE this year, with gains of 65.5% since the turn of the year a healthy upside on the FTSE 100‘s own 8.93% increase over the same period. The UK-based defense and aerospace firm has now seen sentiment further boosted by a price target increase from JPMorgan.

Analyst David Perry has raised the firm's target to 2,200p from 2,100p, reaffirming an “Overweight” rating on the shares.

The upward revision from JPMorgan is supported by several key factors that paint a compelling picture of BAE Systems' financial health and future prospects. The company's recent earnings reports showcase robust growth, with revenue reaching £26.31 billion (TTM), a 14% increase year-over-year. Net income also saw a healthy rise of 5.33% to £1.96 billion.

This financial momentum is further supported by a ballooning order backlog, which recently hit £66.2 billion, up significantly from £55.2 billion in the previous year, highlighting strong demand for BAE's diverse portfolio of products and services.

Sentiment in defence sector shares has been steadily increasing in line with geopolitical tensions, particularly since NATO nations confirmed intentions to increase spending to 5% of GDP over the coming years.

BAE Systems' strategic expansion initiatives are also contributing to its positive outlook. The acquisition of Ball Corporation's aerospace division back in August 2023 for $5.6 billion, BAE's largest acquisition to date, significantly enhanced its capabilities in space and defense technologies. This move positions BAE Systems to capitalize on emerging opportunities in these high-growth sectors, further strengthening its competitive advantage.

While risks remain, the company's robust order backlog and positive analyst sentiment, particularly JPMorgan's recent price target increase, suggest that BAE Systems could be well-positioned to continue its upward climb.