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BAE Systems Results Preview

Sam Boughedda
Sam Boughedda trader
Updated 21 Feb 2023

BAE Systems (LON: BA.) is set to release its preliminary results on Thursday, February 23, and given the geopolitical tensions and war in Ukraine, the company's shares performed significantly well in 2022.

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In the last 12 months, the stock has gained 49.5%, and while it is only up around 3.7% so far this year, the current trend is undoubtedly bullish.

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In its November trading update, the company told investors that its strong order intake was continuing, and its operational performance for the year to date at the time underlined its confidence in its full-year guidance for top-line growth and margin expansion.

The strength of the US dollar had also provided the company with a tailwind, although there has been a pullback since then.

For the full-year 2022, the defense company expects to post sales growth of between 2% to 4%, based on a $1.38:£1 average rate. Based on a $1.23: £1 average rate, sales growth is seen between 7% and 9%.

Underlying EBIT growth at $1.38: £1 is seen between 4% and 6%, while at $1.23: £1, it is expected to be between 10% and 12%.

The GBPUSD is currently trading at 1.2040, with the highest point reached since November being just below the 1.2450 level.

“We are tracking towards a very strong year of order intake. With £18bn secured in the first half we have secured a further £10bn since the half year,” BAE Systems said in its November 15, 2022, update.

Overall, analysts are mostly bullish, with five out of seven analysts assigning a Buy rating to BAE and two assigning a Hold rating to the stock, according to TipRanks. The average price target of those seven analysts is 987.55p, representing a potential 10.76% upside from current levels.

Last month, Barclays said in a research note that it expects BAE's results to be “solid” and accompanied by a bullish outlook.

Meanwhile, at the end of January, UBS analyst Ian Douglas-Pennant upgraded BAE Systems to Buy from Neutral.

The analyst also lifted the firm's price target on the stock to 1,050p from 795p, telling investors in a research note that after relaunching coverage on the name, the firm is 8% ahead of near-term consensus expectations for adjusted EPS.

He explained that this is based on known programs and the expectation of rising growth in munitions manufacturing, cyber support, and command and control software.

UBS believes the current consensus largely ignores BAE's long-term potential, especially in Asia, despite its strong position in the region.


YOUR CAPITAL IS AT RISK. 81% OF RETAIL CFD ACCOUNTS LOSE MONEY.


Sam Boughedda
Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples.