Goldman Sachs has initiated coverage of BAE Systems (LON: BA.) with a Buy rating and a 2,270 pence price target, pointing to strong operational momentum and resilient long-term growth prospects.
The bank said the European defence industry is undergoing its most significant rearmament cycle since the early Cold War build-up, creating favourable conditions for companies with robust contract pipelines.
While acknowledging that valuations across the sector are high, Goldman argued that BAE Systems stands out for its breadth of programmes and execution strength.
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“BAE Systems has strong momentum, with robust operational performance across all sectors,” the analysts wrote.
They added that the quality and scope of the company’s contracts support a forecast of more than 9% compound annual EBIT growth between 2025 and 2030, putting Goldman’s projections ahead of consensus estimates by 2% to 4% in the medium term.
Goldman highlighted BAE’s positioning to expand its European sales, underpinned by demand for advanced defence systems, cyber capabilities, and aerospace technologies.
Key programmes in areas such as next-generation combat aircraft and naval systems are expected to provide sustained growth opportunities.
The analysts also pointed to the company’s proven ability to deliver capital returns alongside operational growth, supported by a strong balance sheet and visibility on long-term contracts.
In Goldman’s view, BAE Systems offers an attractive combination of structural sector tailwinds and above-consensus earnings potential.
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