“What is there not to like,” said investment bank Jefferies of the recent interim results statement from BAE Systems PLC (LSE:BA.).
In particular, BAE's strong order book stood out for analysts at the US 'shop' as they raised the target price to 960p from 945p, while maintaining their 'buy' rating.
For the first six months to June 30, defence manufacturer BAE reported £18bn in orders.
Analysts at Jefferies also highlighted the group’s shorter cycle restock, which could provide a boost to 2023 expansion targets of 4%-5%, labour and semiconductor availability permitting.
BAE also announced a £1.5bn buyback over the next three years, with regular buybacks expected to be launched, which should drive some re-rating.
The broker believes the group is entering a phase of “material margin expansion,” driven by stronger volume and ongoing strong execution.
Last week, the FTSE 100 company said it traded in line with expectations for the past six months.
Underlying earnings increased by 8.1%, though operating profit and net cash flows saw a 21% year-on-year decline