LONDON, June 20, 2026, 16:03 (BST)
- BAE Systems ended Friday’s session at 1,846.5 pence, gaining 0.35% for the day.
- The shares slipped 3.4% this week, while the FTSE 100 dropped 1.0%.
- BAE has secured a $535 million order from the U.S. Army and said it would commit €50 million to European defence-tech venture funds.
BAE Systems slipped over the week, giving back some recent gains as traders pulled out of defence names. That reset could be short-lived. On Saturday, Iran’s military announced it would shut the Strait of Hormuz, citing what it called ceasefire violations. The news hit after London markets shut.
BAE lost 4.74% on Monday after word of a preliminary peace deal between Washington and Tehran. Brent crude dropped almost 5%. Risk picks got more interest. It wasn’t contract news moving BAE this time but the headlines around peace.
Shares bounced 2.2% Tuesday before momentum faded. The stock edged up 0.35% Friday while the FTSE 100 slipped 0.35%, but those gains didn’t offset Monday’s loss.
BAE landed a $535 million deal to supply the U.S. Army with more M109A7 Paladin self-propelled howitzers and M992A3 ammo carriers. “The M109A7 Paladin is a battle-proven platform that delivers what Soldiers need to succeed on today’s battlefield,” said Dan Furber, vice president of artillery programs at BAE’s Combat Mission Systems business. BAE Systems
The group is putting €50 million into VC funds that invest in European defence-tech firms. “We’ve always valued the capability and ingenuity that early-stage founders can bring to the table,” said Dave Ewing, BAE’s head of technology commercialisation. BAE Systems
Longer-term, BAE’s outlook still depends on turning its big order backlog into profit and cash. The company started 2026 with £83.6 billion in orders, its highest ever. BAE sees sales up 7% to 9% and underlying EBIT up 9% to 11%. Underlying EBIT is adjusted operating profit before interest and tax, using BAE’s own non-GAAP metric.
The focus now is on converting those record-high backlogs, which the sector is counting on. “They want clear evidence that these record-high backlogs can actually convert into timely revenue, margin and ultimately, cash flow,” Morningstar analyst Loredana Muharremi said. Muharremi pointed to BAE and Italy’s Leonardo as strong in air defence and electronics, calling Rheinmetall her top European defence pick. Morningstar
BAE has deals this week to back up demand, but there’s still doubt on execution. The Paladin contract brings in funded work. The venture effort could open the door to more advanced tech. But none of that matched the market’s sharp reaction to the latest Iran conflict pricing shift.
But this trade isn’t one-way. If U.S.-Iran talks go well and Hormuz stays open, BAE’s valuation could lose more of its geopolitical premium, especially as defence stocks already traded at high premiums. Conflict flaring again could lift demand for weapons and resupply, but also push up supply-chain costs, inflation, and bring more risk of slow government contracts. Swiss officials on Saturday said talks to put the U.S.-Iran memorandum in place were still ongoing.
Investors are looking at the Hormuz dispute next week, along with any updates on the Global Combat Air Programme—GCAP. The fighter jet project has BAE, Leonardo, and a Mitsubishi Heavy Industries-backed Japanese group involved. Both Britain and Japan have said the international GCAP contract deadline is the end of June. BAE’s next financial update isn’t until its half-year results on July 30.
