BAE: Fair Value Estimate Increased on Strong Multidomain Growth Outlook and EU Defense Integration

We raise our fair value estimate for BAE Systems from GBX 1,550 to GBX 2,250 to reflect a structurally stronger growth outlook, underpinned by maintained global rearmament and deepening integration with European defense priorities. The UK’s reentry into EU-funded programs via the EUR 150 billion EDIS framework marks a turning point in regional alignment. While the fund remains below what we consider sufficient to address Europe’s defense capability gap, it lays a critical foundation for broader industrial coordination and larger-scale future instruments.