BAE Systems PLC (LSE:BA.) was one of the best performing of London's blue-chips stocks last year and Barclays is predicting there could be a new phases of growth around the corner.
Analysing the defence contractor's record £59bn backlog and 70% rise in order intake to £37bn, the bank reiterated its 'overweight' rating and 1020p share price target.
"A geographically diversified portfolio, enhanced cash generation, and balance sheet optionality positions BA attractively relative to peers, in our view," analysts said in a note.
The backlog will convert to higher organic growth, they forecast, based on a historical conversion rate to revenue that has increased since 2018 to an average of around 43%.
In one scenario analysis the analysts ran through their spreadsheets, this implied a 45% backlog conversion in 2024 would result in an incremental £2bn or so of revenue and roughly £220m of underlying profit (EBIT), around an 8% earnings per share uplift versus the current City consensus.
"In our view, there remains further potential upside beyond our current forecasts," the analysts added, with a predicted £1bn of share buybacks per year.