London, May 19, 2026, 14:05 BST
- BAE Systems shares gained 2.7% in London afternoon trading, outpacing the FTSE 100.
- Saab, Hensoldt and Rheinmetall rose in Europe as defence names took the lead in the sector.
- BAE is standing by its 2026 guidance. But valuation is still a risk, and order conversion hasn’t sped up.
BAE Systems plc traded higher in London on Tuesday, topping the FTSE 100. Investors moved back into defence names as European stocks gained.
The stock traded at 1,931.5p to sell and 1,932.5p to buy as of 13:47 BST, up 51.5p, or 2.74%, from the previous close with at least a 15-minute delay on prices. The FTSE 100 was up 0.64% and the UK aerospace and defence sector added 1.93%, Barclays market data showed. Barclays
Defence stocks topped European markets again after a rough patch. The STOXX 600 added 0.8%, with Saab up 5.3%, Hensoldt up 7%, and Rheinmetall up 4.6%. Reuters said the sector moved on news of Sweden buying navy frigates from France and a bounce in the wider market after U.S. President Donald Trump talked up chances of a deal curbing Iran’s nuclear programme. Mark Haefele, chief investment officer at UBS Global Wealth Management, said higher yields likely won’t hurt markets as long as growth holds up. Reuters
BAE shares rebounded less than two weeks after the company issued a clear trading update. BAE kept its 2026 guidance unchanged: sales are seen up 7% to 9%, underlying EBIT — operating profit before certain items — expected to grow 9% to 11%, and free cash flow of more than 1.3 billion pounds. Chief Executive Charles Woodburn called it “a strong start to 2026,” saying the company is well positioned for defence opportunities now and ahead.
BAE isn’t a niche play. It’s the UK’s top defence contractor, building Typhoon jets, nuclear subs and warships at home. It also supplies the U.S., its top customer, with gear from combat vehicles to satellites and munitions. Reuters said this month BAE’s order backlog, which is work signed but not done yet, nearly doubled since Russia invaded Ukraine in 2022. In that time, BAE shares have climbed close to 300%. Reuters
BAE’s valuation debate isn’t settled yet. Investors Chronicle lists 18 analysts with a median 12-month target for the stock at 2,308.5p, but estimates go from 1,700p all the way to 2,662p. The wide spread shows how quickly BAE shares can move when sentiment on the sector turns. Investors Chronicle
This isn’t a one-way bet. Defence stocks have rallied hard, and crowded trades can reverse fast if investors sense disappointment. Hargreaves Lansdown equity analyst Aarin Chiekrie told Reuters last month that higher defence budgets are priced in across global defence shares. Ciaran Callaghan, Amundi’s head of European equity research, flagged cheaper drones are making investors rethink appetite for costly older platforms. Reuters
BAE is tracking two things now: whether the market still wants defence names, and if governments can actually fund their budget promises. After Tuesday’s jump, there are still buyers. The question now is if orders keep showing up to support the stock price.
