BAE Systems PLC (LSE:BA.) should update on a solid first-half performance on Wednesday, August 2, with free cash flow in particular being boosted by a strong order book, Jefferies analysts say.
Results from the FTSE 100-listed defence firm should largely meet expectations, Jefferies noted, anticipating sales will have jumped 6% from £10.6bn, while orders could sit at £15bn.
Free cash flow may well be lifted to Jefferies’ predicted £421mln as a result, the broker said, with the company’s aircraft division in particular set to provide strong margin momentum.
“As a rare European defence pure play, BAE Systems enjoys long-term top-line growth potential,” Jefferies continued.
“We believe the market underappreciates the strength BAE as European defence budgets expand.”
Anglo-Australian-US submarine deals under the AUKUS agreement should boost BAE’s £53bn order backlog, the broker added, alongside the repercussions of the Ukraine war.
Jefferies tipped BAE a ‘buy,’ offering a share price target of 1,100p, which would mark a prospective rise of almost 20% on Tuesday’s close.