LONDON, April 22, 2026, 20:15 BST
BAE Systems plc slipped for a second day on Wednesday, down 1.49% to £21.13, building on Tuesday’s 4.22% slide. Investors appeared to be stepping back from one of Europe’s defense heavyweights, with the trade looking crowded. The FTSE 100, meanwhile, edged down 0.21% in Wednesday action.
It’s a tricky stretch for investors: BAE’s 2025 final dividend, 22.8 pence per share, lands on the record books April 24 and is set to pay out June 4. Their annual general meeting slots in between, on May 7. That payout brings this year’s total dividend to 36.3 pence.
European markets struggled Wednesday. The STOXX 600 slipped 0.4%, with nerves over Middle East tensions and corporate earnings putting pressure on sentiment. Aerospace and defence stocks across Europe dropped 2.4%, according to Reuters.
But this isn’t just about BAE. Investors are starting to wonder whether European defence stocks have already absorbed the impact of increased budgets. MSCI’s Europe Aerospace and Defence Index slid 9.2% in March—marking its steepest monthly decline in five years, Reuters noted on Monday. Profit-taking, lofty valuations, and questions about the impact of low-cost drones all weighed on sentiment across the sector. Martin Frandsen at Principal Asset Management described the trend as “de-grossing,” meaning portfolio managers are trimming their exposure. Reuters
BAE’s order backlog remains hefty. Back in February, the company posted a 12% jump in full-year operating profit, with sales climbing 10% to £30.66 billion and a record backlog hitting £83.6 billion—representing contracted work still on deck. Looking ahead, BAE projected 2026 sales growth between 7% and 9%, and forecasted operating profit to rise 9% to 11%.
Chief Executive Charles Woodburn described BAE as working in a “new era of defence spending,” citing heightened security threats. With business spanning fighter jets, submarines, combat vehicles, munitions, electronic warfare, and cyber systems, the company’s reach is wider than most European rivals. Reuters
It’s a similar story at rivals. Thales posted a 9.7% organic jump in first-quarter sales on Tuesday, fuelled by defence shipments. But order intake trailed the analyst consensus the company pulled together, and the shares slid 3.6% at the open.
Thales said Denmark picked the SAMP/T NG air-defence system, provided via Eurosam, its joint venture with MBDA; deliveries are scheduled to start in 2028. Reuters noted the move comes as Europe seeks to curb dependence on U.S. suppliers—a shift that gives local defence firms a boost, but also ramps up competition in air defence, missiles, and electronics.
BAE faces the possibility that while demand holds up, the pace of new orders could slow, or buyers could pivot to lower-cost systems quicker than many investors are betting. Morgan Stanley analysts, quoted by Reuters, noted some contracts have been pushed back or broken up due to fiscal constraints in places like France and Britain. Amundi’s Ciaran Callaghan, also cited by Reuters, pointed out that rising interest in cheaper drones is casting doubt on future demand for the traditional, higher-priced platforms.
Right now, the share move seems to be more of a valuation check than a fundamental shift for BAE. “The longer-term growth picture remains intact,” Hargreaves Lansdown’s Aarin Chiekrie said. Still, near-term pressure isn’t going anywhere. MarketWatch data shows BAE is trading under the £23.60 peak from March 18. Reuters
