Jefferies Lifts BAE Systems Shares to ‘Buy’ on Defense Supercycle

BAE Systems (LON: BA.) shares are garnering renewed investor attention after Jefferies upgraded the stock to ‘Buy' from ‘Hold' in a note to clients, signaling confidence in the defense giant's prospects.

The firm also raised its price target for the stock to 2,060p from 1,630p, highlighting its positive outlook on the aerospace and defense sector.

The stock is currently trading at 1,848p, having started strongly at Monday's open. While recent trading has been mixed, with a slight dip of 1.1% over the past month, BAE Systems shares have performed very well in 2025, rising more than 60%.

Jefferies' analyst Chloe Lemarie cited several key factors underpinning the upgrade. Accelerating momentum in civil aerospace, broad-based aftermarket upgrades, and attractive valuations within the defense sector are all said to contribute to the investment case.

Lemarie specifically noted that current valuations “offer good entry points into an attractive supercycle,” suggesting a long-term positive trend for the industry.

This aligns with a broader sentiment that geopolitical tensions and increased military spending are creating a favorable environment for defense companies.

Jefferies' upgrade is not an isolated event. Bank of America also recently upgraded BAE Systems from ‘Underperform' to ‘Buy,' substantially increasing the price target from 1,515p to 2,280p.

Analyst Price Targets

BofA's rationale centered on a fundamental shift in the European defense landscape, with a greater emphasis on hard power. They highlighted BAE's significant intellectual property in critical areas such as missiles, air combat technology, and autonomous precision strikes, positioning the company for sustained growth well into the future.

On Friday, it was reported that BAE Systems BAE Systems was awarded a $139.6 million modification to a contract for the procurement of Armored Multipurpose Vehicles.