BAE Systems Shares Called Fully Priced as BNP Paribas Starts Coverage at Neutral

BAE Systems (LON: BA.) was initiated with a Neutral rating and a $113 price target by BNP Paribas on Thursday, with the French bank telling investors the UK defense giant’s growth prospects remain strong but its shares already reflect that outlook.

In a research note, the BNP Paribas analyst said BAE Systems continues to benefit from robust demand across its defense portfolio, as elevated geopolitical tensions and rising government defense budgets in the UK, Europe and the US support a lengthy order pipeline.

However, the analyst argued that much of this positive momentum has already been priced in by the market, limiting near-term upside for the stock.

The initiation comes after a strong run for BAE Systems shares, which have rallied sharply over the past year alongside broader strength in European defense stocks, driven by increased military spending commitments from NATO members and ongoing conflicts in Eastern Europe and the Middle East.

Shares of the London-listed company gained 1.3% to 1,923.5p pence on Thursday. The stock has edged up 0.1% so far in Friday’s session.

BAE Systems, one of the world’s largest defense contractors, manufactures combat vehicles, submarines, warships, fighter aircraft components and cybersecurity systems, with major customers including the UK Ministry of Defence and the U.S. Department of Defense.

BNP Paribas’ Neutral stance places it among a mixed field of analysts on the stock, with some maintaining more bullish targets on continued order growth while others echo caution over valuation after the sector’s sustained rally. Investors will next look to BAE Systems’ upcoming trading update for further guidance on order intake and margins.