12 November 2025
If you are covering BAE System’s latest financial results, please find below a comment from Matt Dorset, equity research analyst at Quilter Cheviot:
“BAE Systems has continued to keep up its good momentum, with operational performance remaining strong and trading coming in line with market expectations. Higher demand, driven by increased geopolitical uncertainty and increasing global defence budgets, continues to be evident, with order intake of £27bn year to date, up 8% year on year. This includes large orders such as the deal with Turkey for 20 Eurofighter Typhoons, continued work on the Dreadnought program, and funding for US combat vehicle production. The agreement with Norway for at least five Type 26 frigates is expected to lead to a significant order which will be booked after 2025, meaning the revenue pipeline also remains robust.
“Full year guidance has also been reiterated, so BAE is continuing to target 8-10% sales growth and earnings per share growth. Management has not seen any material impacts on its US business from the government shutdown, but if the shutdown persists it could cause delays to contract funding and timing of payments. As such, it will be watching developments in Congress closely and hope for a resolution in the coming days.
“In terms of valuation, BAE is trading on 22x 2026’s earnings per share, a significant premium to history but more than justified in our view given the very strong mid-term growth prospects underpinned by increasing defence budgets across the world. The defence story shows no sign of slowing down for now.”
