LONDON, April 22, 2026, 20:15 BST
BAE Systems plc shares fell for a second straight session on Wednesday, extending a pullback in one of Europe’s biggest defence names as investors reassessed a crowded trade in military contractors. The stock dropped 1.49% to £21.13 after sliding 4.22% on Tuesday, while the FTSE 100 fell 0.21% in Wednesday trade.
The timing is awkward for shareholders. BAE’s 2025 final dividend has a record date of April 24 and is due to be paid on June 4, while the company’s annual general meeting is scheduled for May 7. The company lists the final dividend at 22.8 pence a share, taking the 2025 total to 36.3 pence.
The move also came on a weaker day for European markets. The STOXX 600 fell 0.4% on Wednesday as Middle East uncertainty and corporate earnings weighed on sentiment, and European aerospace and defence shares lost 2.4%, Reuters reported.
The sharper issue is not BAE alone. Investors have started to question how much of the rise in European defence budgets is already priced into shares. Reuters reported on Monday that MSCI’s Europe Aerospace and Defence Index fell 9.2% in March, its biggest monthly drop in five years, as profit-taking, stretched valuations and the role of cheap drones in modern warfare hit the sector. Martin Frandsen, portfolio manager at Principal Asset Management, called it “de-grossing” — market jargon for cutting positions. Reuters
BAE still has a thick order book. In February, the company reported a 12% rise in full-year operating profit, sales up 10% to £30.66 billion and a record £83.6 billion order backlog — contracted work not yet delivered. It forecast 2026 sales growth of 7% to 9% and operating profit growth of 9% to 11%.
Chief Executive Charles Woodburn said then that BAE was operating in a “new era of defence spending,” driven by security threats. The company has exposure to fighter jets, submarines, combat vehicles, munitions, electronic warfare and cyber systems, giving it a broader base than many European peers. Reuters
Competitors are showing the same split between strong demand and more cautious investors. France’s Thales reported first-quarter sales up 9.7% organically on Tuesday, helped by defence deliveries, but its order intake missed company-compiled analyst expectations and its shares fell 3.6% in early trading.
Thales also said Denmark had chosen the SAMP/T NG air-defence system, supplied through Eurosam, its joint venture with MBDA, with deliveries from 2028. Reuters said the deal comes as Europe tries to reduce reliance on U.S. suppliers, a trend that can support regional defence groups but also raises competition across air defence, missiles and electronics.
The risk for BAE is that demand may stay strong but orders arrive more slowly, or shift toward cheaper systems faster than investors expect. Reuters cited Morgan Stanley analysts as saying some contracts have been delayed or phased because of fiscal pressures in countries including France and Britain, while Amundi’s Ciaran Callaghan said cheaper drones were raising questions about demand for more expensive legacy platforms.
For now, the share move looks more like a test of valuation than a break in BAE’s business story. Hargreaves Lansdown equity analyst Aarin Chiekrie said the “longer-term growth picture remains intact,” but that does not remove the near-term pressure. BAE is still trading below the £23.60 high reached on March 18, MarketWatch data showed. Reuters
