By Cristina Gallardo
BAE Systems said it maintained a solid order intake in the third quarter, and reiterated its guidance for the year.
The defense group said Tuesday that it has around 25 billion pounds ($32.17 billion) in orders booked in the year so far, up from 15.1 billion pounds in August. This includes a $184 million contract to supply armored vehicles to the U.S. Army and another valued at $177.5 million to boost production of guided weapon components in Australia.
This performance underpins the London-listed company's guidance for 2024, which remains unchanged since its upgrade in August. BAE Systems expects sales to grow between 12% and 14% this year, with the same rate of growth in underlying earnings before interest and taxes.
In the U.K., its home market, BAE said it is actively involved in talks with the Labour government on its ongoing Strategic Defence Review, which will determine the priorities for defense spending over the next few years and is expected to publish its recommendations in the first half of 2025.
The group continues to expect growth opportunities in the U.S. in the medium-term because its portfolio remains well-aligned with the priorities set out in the country's national defense and intelligence strategies.
BAE's other markets in Europe, the Middle East and Asia are also poised for higher defense spending, offering future opportunities for growth, it said.
Sales of BAE's space and mission systems business are accelerating in the second half of the year, in line with the company's expectations, it added.
All this growth is fueling an expansion of BAE's global workforce, which increased by approximately 7,500 employees by the end of October.
J.P. Morgan analyst David Perry said BAE Systems will benefit from the European and Asian defense upturn expected in the coming decade.
Recent news have been overwhelmingly positive for the company, he noted, including the U.K.'s plan to increase defense spending by 5.4% in 2024-25, the expectation that U.S. President-elect Donald Trump will put pressure on European governments to raise it further, and progress in the development of new U.K.-Italian-Japanese fighter jets.
However, BAE's shares are still trading between 8% and 11% lower than the U.S. defense primes, Perry added.
"We think BAE should trade on at least the same multiple as its U.S. peers given its financial performance and, potentially, superior top line growth prospects in the coming years," he said.
BAE shares were up 0.75% in early morning trade in London at 14.03 pounds. The stock has increased 26% year to date.
Write to Cristina Gallardo at cristina.gallardo@wsj.com
(END) Dow Jones Newswires
November 12, 2024 03:22 ET (08:22 GMT)
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