BAE System Share Price: Catalysts Needed?

BAE Systems (LON: BA.) revealed in an AGM statement on Thursday that trading so far this year has been in line with expectations, but is that enough for the stock's rally to continue?

Charles Woodburn, BAE Systems Chief Executive, said in the update that the company's operational performance “continues to be strong,” and its backlog and programme incumbencies underscore the firm's confidence in its long-term value-creating model.

“We're continuing to deliver on mission-critical requirements for our customers and progress our long-term strategic programmes within the elevated threat environment,” stated Woodburn.

“Our global presence and diverse portfolio of products and services provide high visibility for top-line growth, margin expansion, and cash generation in the coming years.”

BAE shares have rallied significantly since February 2022. Meanwhile, over the last 12 months, the stock is up 39.5%, while in 2024, it has gained 23.85%. 

However, one analyst believes that catalysts are needed in order to see the share price rise continue.  

In February, Jefferies analyst Chloe Lemarie downgraded the BAE Systems rating to Hold from Buy with a 1,210p price target. BAE Systems shares have climbed over 15% in the last three months. 

However, Lemarie cited BAE's valuation for the downgrade. She told investors that they appreciate the FTSE 100 company's growth-compounding potential but believe specific catalysts are needed for the shares to continue to perform. 

Ahead of the integration of Ball Aerospace, Jefferies expects these to come in 2025.