BAE Systems PLC (LSE:BA.) and Rolls-Royce Holdings PLC (LSE:RR.) are among defence firms likely to do well from a flurry of approvals for increased security spending last week, analysts have said.
Pointing to Congress’ approval of a new defence bill in the US, alongside UK government plans to bolster nuclear capabilities, Deutsche Bank said European firms were set to benefit.
“Last week, there was a flurry of news surrounding defence spending in the Western world,” the bank wrote in a note.
“Each by itself may not be eye-catching, but when put together, they provide a clear picture of the direction of defence spending.
“Together, they provided solid evidence of support for defence spending, which is critical for the long-term defence revenue growth thesis in Europe.”
In the US, Congress approved a US$1.2 trillion (£951 million) government funding package, which included a 3% increase in defence spending.
Deutsche noted this was “a big relief for cash inflow for defence companies”.
UK ministers unveiled plans to collectively invest over £763 million in the nuclear industry, and a boon for BAE, Rolls-Royce, Babcock and energy firm EDF.