BAE Systems PLC (GB:BA) yesterday raised its annual profit guidance following a record £2.1 billion worth of orders booked in the first half of 2023. In its half-yearly earnings for 2023, the company posted stronger numbers as it witnessed huge demand for its products since the outbreak of war between Russia and Ukraine.
Against this backdrop, BAE shares have experienced a rally over the past three years, surging more than 125%. Post-results, the share went up by 5.3% on Wednesday. Analysts hold a highly optimistic view of the stock, giving it a Strong Buy rating.
BAE Systems is a prominent manufacturer and supplier of defense products, catering to the air, land, and marine sectors. The company has the perfect combination of cutting-edge technology and a strong geographical presence.
Strong Results, Stronger Outlook
BAE posted revenue of £11 billion in the first six months of 2023, up 13% from £9.74 billion in the same period a year ago. The operating profit increased by 20% to £1.2 billion. The highlight of the results was the company’s order intake, which was a record £21.1 billion during this period. This led to its order backlog reaching £66.2 billion, and the company also expects this momentum to continue in the second half.
The board of directors has announced an interim dividend of 11.5p per share for the first half of 2023, reflecting an 11% increase compared to that declared in the previous year.
Looking ahead to the full-year figures, the company is confident in delivering better-than-expected results, supported by its operational performance and continued high demand for its products. For 2023, The company now anticipates sales to increase by 5% to 7%, up from the previous guidance of 3% to 5%. Moreover, the underlying earnings per share guidance have been raised to 10% to 12% from the earlier estimate of 5% to 7%. BAE has also revised its full-year forecast for free cash flow and now anticipates generating over £1.8 billion, which is approximately £600 million higher than its previous projection.
What is the Prediction for BAE Stock?
Analysts remain highly bullish on the company’s stock and believe more growth is expected in the coming years. With a strong buyer portfolio across geographies, BAE Systems’ growth potential appears boundless.
BA stock is also part of the “Perfect 10” club on the TipRanks Smart Score tool, which indicates its potential to beat the market returns. The tool assesses the stock against various factors and serves as a helping hand for investors in picking the right stocks. Stocks with a score of eight, nine, or ten fall into the outperform category.
According to TipRanks, BA stock has a Strong Buy rating based on a total of nine recommendations, of which seven are Buys.
The average price target is 1,107.67p, which is 12.6% above the current trading levels.
