BAE Systems PLC (LSE:BA.) could receive a boost from another deal relating to its supply of a new class of submarines for the UK and Australia, analysts have said.
Referencing a weekend Defence Journal article, Citi Group discussed a rumoured ‘detailed design and long lead items’ contract for BAE, which would complement its existing supply agreement by ensuring future protection if the Ministry of Defence scrapped the plans.
“While the initial contract is unlikely to be particularly material, it reduces risk and gives very long-term visibility,” Citi Group said.
The contracts relate to the AUKUS deal, which will see the US and UK commit to helping Australia develop its own nuclear-powered fleet.
These Ship Submersible Nuclear AUKUS (SSN-AUKUS) submarines will replace existing Astute Class warships, being fitted with US technology.
“We estimate SSN-AUKUS is worth 20-30p per share,” the bank added, though “some of which is already likely in the price”.
BAE has already enjoyed an impressive share price performance this year, with the stock rising 4.8% to 978p on Wednesday alone after its interim results.