Morgan Stanley upgrades BAE Systems to 'overweight', sees buying opportunity
Morgan Stanley upgraded BAE Systems to ‘overweight’ from ‘equalweight’ and kept its price target at 570p, saying the de-rating was overdone.
Aerospace and Defence
10,597.35
17:09 25/04/24
BAE Systems
1,320.00p
16:45 25/04/24
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17:14 25/04/24
FTSE 350
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The bank said that given the stock’s defensive attractions, it was surprised at its recent undeperformance.
“Programme and defence budget concerns look overdone, creating a valuation anomaly and more than 25% upside to our unchanged price target,” said the bank.
“We don’t expect Typhoon production to have to slow, while any scaling back in Australia shouldn’t be material,” said MS. “At the same time, defence spending reviews in the UK and US should hold no fears for BAE.”
It said that while it expects BAE’s 2015 results to be weighted towards the second half, a solid first-half performance and outlook on 30 July could be a positive catalyst to buck the recent de-rating trend.
At 1031 BST, the company's shares were down 0.3% at 451p.