BAE Systems H1 Earnings: Here’s What to Expect

BAE Systems (LON: BA.) is set to report first-half results on July 30, with analysts expecting broadly steady performance but with limited upside surprises.

Earlier this month, Kepler Cheuvreux downgraded the stock to Reduce from Hold, setting a 1,510p price target. 

The firm said: “H1 results on 31 July are set to be soft, but management is expected to confirm guidance for the year, with limited room for upside versus consensus estimates.”

Analyst consensus forecasts H1 sales of £14.5 billion, underlying EBIT of £1.52 billion, and underlying earnings per share of 34.1p. A dividend of 14.5p is expected, with free cash flow estimated to come in negative at £376 million.

Kepler Cheuvreux noted that the market has re-rated European defence stocks, which has helped BAE outperform its US peers, “even though European defence (ex UK) is only 10% of sales.” 

Despite the recent rally in European defence shares, the firm warned: “The market may be excused for falsely believing that the share price move is driven by significant pending upgrades to growth estimates, when for now the main reason for the inflated P/E is forced buying by macro, ESG, and ETF funds.”

BAE reaffirmed its full-year 2025 guidance at its May AGM, expecting sales growth of 7–9% and EBIT growth of 8–10%. It also projects more than £1.1 billion in free cash flow for the year.

Kepler trimmed earnings forecasts, citing “USD weakness and higher share counts,” with a reduced buyback impact due to the rising share price.

BAE Systems shares are up more than 59% so far this year. However, the stock has pulled back by around 3% in the last month.