Financial Trading Blog
Stock of the day 11/02/2016 – BAE Systems PLC
The company releases its full year figures next Thursday.
After initially surging from a 2015 opening price of £4.74 to an all-time high of £5.49 by the middle of March BAE Systems then went into a period of severe decline, culminating in a 13 month low of £4.20 by September.
Yet things began to look up for the company as it headed into November. An update in the middle of the month stating that BAE would be cutting 371 jobs in its military air and information business due to the reduced production of Typhoon (revenue from the fighter aircraft set to fall from £1.3 billion in 2015 to £1.1 billion in 2016) was fairly well received by the markets. Oddly this move saw investors ignore the lingering profit issues to instead focus on the company’s claim that it ‘expects good sales growth in 2015’ backed by a ‘robust order backlog at the half year of £37.3 billion’.
(Source: IT-Finance.com 11/02/2016)
Sadly the stock also received a lift in the aftermath of the November terrorist attack in Paris, with investors speculating on an increase in defence spending in light of the tragedy, sending BAE from £4.37 on the 12th November (the morning of its last update) to £5.17 by the 27th.
However these gains were quickly lost across a rocky December and BAE Systems entered 2016 at £4.96. A spike at the start of January did see the stock return to the £5.30s for the first time since April 2015, before market turmoil of the start of the year took its took, leaving the company at a current trading price of £4.58 (IT-Finance.com, 11/02/2016), a 3 month low.
This time last year BAE Systems got the boost from its full year figures that sent it to its aforementioned all-time highs, so the company will be under pressure this time around to produce a similarly sound set of results.
BAE Systems PLC has a consensus rating of ‘Hold’ with an average target price of £5.47.
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