30 July 2025
If you are covering BAE Systems’ latest financial results, please find below a comment from Matt Dorset, equity research analyst at Quilter Cheviot:
“BAE posted strong first half results this morning as the clear momentum in the group has been supported by increasing defence budgets around the world. Sales were up 11%, earnings up 13% and earnings per share up 12%, all 1-2% ahead of consensus.
“Given the rush to increase defence spending, BAE saw positive contribution from all segments in the first half. The Platforms and Services segment was especially strong, with sales up 21%, driven by strong demand for combat vehicles and artillery. More broadly, BAE is investing significantly in capacity expansion to facilitate continued growth across the group.
“Given the strength of results, and strong outlook for defence spending, BAE increased sales growth and earnings growth guidance by 1%. Positively, management also commented that results and the heightened geopolitical threat environment “strengthen their confidence in the positive momentum of the business” which is a signal that long-term higher growth can be achieved.
“Unsurprisingly, BAE’s shares are looking expensive compared to its history. However, historical comparisons are not overly useful given the significant geopolitical changes we have seen over the last few years – we view this valuation as more than justified given very strong mid-term growth prospects underpinned by increasing defence budgets across the world.”
