LONDON, June 22, 2026, 12:04 BST
- BAE Systems dropped 1.46% to 1,819.5p, lagging the FTSE 100, which gained 0.29%.
- The new £500 million tranche at that price would cover around 27.5 million shares, or about 0.9% of BAE’s voting shares.
- The next thing to watch is the company’s July 30 half-year report. Investors will look past the buyback headline and focus on backlog conversion and cash generation.
BAE Systems plc (LSE: BA.) dropped 1.46% to 1,819.5p by 12:02 BST on Monday, slipping 27p from Friday’s 1,846.5p finish. This came as the defence firm kicked off the third £500 million phase of its £1.5 billion buyback. Investors seem to be shrugging off the buyback, which had already been flagged, with some pressure after talks between the US and Iran took some of the risk premium out of defence names. A weak profit showing at Babcock hit sentiment for the UK defence space too. The FTSE 100 added 0.29%, leaving BAE well behind.
J.P. Morgan Securities has been told by the company to buy back stock in the market as a riskless principal. This tranche runs until June 30, 2027. Shares bought will be cancelled, not kept in treasury. The timing matters: £500 million sounds big, but it can be spread over up to a year and won’t set an immediate floor under the stock.
The numbers tell the story on why the announcement didn’t stop the slide. At 1,819.5p, £500 million can pick up roughly 27.48 million shares, or 0.91% of the 3.008 billion voting rights posted at the end of May. For comparison, BAE lost about £812 million in equity value in just a few hours on Monday as shares dropped 27p—almost 1.6 times the size of the whole tranche. Knocking out that chunk of shares would only lift earnings per share by about 0.9%, if nothing else moves.
BAE started out soft, opening at 1,819p, getting up to 1,840p, then sliding to 1,808.4p at the session low. That drop put shares below the June 15 bottom of 1,819.5p, the floor set in that 4.74% peace-talk sell-off. Monday’s top print never recovered Friday’s close. The buyback announcement didn’t trigger a breakout.
Defence names struggled as the macro picture went the other way. Brent crude dropped under $80 a barrel with Qatar and Pakistan saying there was movement on a US-Iran plan to help protect Strait of Hormuz shipping. “As long as we’ve got the oil prices below $80 a barrel, that’s keeping the market relatively buoyant,” said Fiona Cincotta, senior market analyst at City Index. Equities did better, but there wasn’t much of a lift for defence. Babcock shares fell after it posted a 19% drop in underlying operating profit, hit by a £140 million frigate charge. Reuters
BAE wrapped up 2025 with a record £83.6 billion order backlog. Sales climbed 10% to £30.66 billion. Underlying EBIT was up 12% to £3.32 billion. Underlying EPS gained 12% to 75.2p. Chief Executive Charles Woodburn said the company is “confident in our ability to keep delivering growth over the coming years.” BAE Systems
Valuation still needs proof. Monday’s price divided by projected 2025 EPS gives a multiple of about 24.2 times. If you take the midpoint of BAE’s 2026 EPS-growth guidance—10%—that points to EPS near 82.7p and a forward multiple around 22 times. This is not an analyst call; just math using management’s 9% to 11% range. That’s also why the earlier announced buyback isn’t enough for a re-rating.
BAE shares have given up much of their earlier gains. The stock is sitting at 1,819.5p, about 22.9% below its 52-week high of 2,360p, and it’s off around 3% from a year ago. Now, traders are watching if BAE can turn its order book into better margins and free cash flow, and do it without delays in its programmes, rather than focusing on defence spending by Western governments.
Everything hinges on 1,800p support here. A drop through Monday’s 1,808.4p low and then beneath that round level would open the way lower, erasing June’s clear base, especially if talks keep weighing on defence stocks. The risk is one-sided: even a buyback out to June 2027 won’t catch each selloff. For any bullish move, shares have to claw back above 1,846.5p and then last week’s 1,868p top to prove Monday’s fall was just noise.
Focus shifts to BAE’s July 30 half-year results after recent moves. Markets want to see if the company sticks with 7%–9% sales growth and 9%–11% growth in underlying EBIT and EPS. There’s also cash flow—traders expect it to clear £1.3 billion. BAE’s huge £83.6 billion backlog is another watch point, with investors tracking how much of it actually turns into revenue. This update, more than any ongoing buybacks, could determine if 1,800p becomes a lasting floor for the shares.
