BAE Systems: H1 26: EPS beats consensus by 5% and FCF beats our forecast by £1.9bn

Research evidence excerpt

BAE Systems: H1 26: EPS beats consensus by 5% and FCF beats our forecast by £1.9bn

C A Z E N O V E Europe Equity Research

30 July 2026

BAE Systems Overweight

BAES.L, BA/ LN

H1 26: EPS beats consensus by 5% and FCF beats our Price (29 Jul 26):2,020.0p

forecast by £1.9bn ▲Price Target (Dec-27):2,450.0p Prior (Dec-27):2,400.0p

Our take: This morning BAE reported H1 2026 EBITA and EPS that are 1% and

5% above the BBG median consensus (Table 1), respectively. There is no European Aerospace & Defense

meaningful consensus for FCF but the print of £1.8bn was £1.9bn better than we David H Perry, CFA AC

had forecast. We increase our 2026-2030E EPS by 2% pa (Table 2). Reflecting (44-20) 7742-5606

higher EPS estimates, we nudge up our multiples-based Dec-27 PT by 2% to david.h.perry@jpmorgan.com

J.P. Morgan Securities plc

2,450p, for 21% potential upside over the next 17 months. BAE remains one of our

Lucy Fitzgeraldtop picks in large cap European Defence. It has strong long-term visibility, a

(44 20) 3493-5251

product portfolio with a wide moat, and a proven track record for execution and lucy.fitzgerald@jpmorgan.com

capital allocation. J.P. Morgan Securities plc

Jash R Naik

• Noteworthy area – Underlying EBIT by division: Table 1 shows the (91 22) 6157-3797

divisional results. The three US-led divisions (Electronic Systems / Platforms jash.naik@jpmchase.com

& Services / Cyber & Intelligence) all beat our estimates . Within these J.P. Morgan India Private Limited

divisions, we would highlight that Space & Missions Systems (formerly Ball Titus MacDermot

Aerospace) grew sales 30% yoy, and Hagglunds / Bofors (Swedish armoured (44-20) 3493-7137

vehicles / weapons) grew nearly 30% yoy. On the other hand, the Maritime titus.macdermot@jpmorgan.com