Investing.com — Morgan Stanley named this British company its new top pick in European defence, saying the British defence contractor’s recent share price weakness offers an attractive entry point as it expects higher military spending in key markets to drive earnings growth.
The brokerage cut its price target to 2,420 pence from 2,662 pence to reflect lower valuation multiples and a higher discount rate.
Morgan Stanley maintained its “overweight” rating on , citing the company’s broad exposure to rising defence budgets in the United States and the Middle East, a record £84 billion order backlog and diversified revenue base.
The brokerage said expected UK defence policy announcements should ease political uncertainty weighing on the shares, while BAE’s global footprint and exposure to both conventional and next-generation defence programmes position it to outperform peers.
It added that the stock deserves to trade at a premium to U.S. defence primes given its stronger growth outlook, diversification and shareholder returns.
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