UK Defence: Beyond The DIP

研报英文原文证据摘录

UK Defence: Beyond The DIP

UK | Capital Goods EquityMayResearch17, 2026

KEY STOCKS FEATURED INCLUDE:UK Defence: Beyond The DIP

Defence remains a market where we are most confident of enduring end TICKER RATING PRICE TARGET

market growth, and we expect renewed interest in the sector when the AVON LN BUY 2,390.00p

Defence Investment Plan finally emerge. Our pecking is unchanged - CHG BAB LN BUY 1,400.00p

remains our top pick, and we retain Buy recs on both AVON and BAB. We CHRT LN HOLD 1,290.00p

keep QQ at Hold, concerned at how the delay has impacted FY27F, whilst CHG LN BUY 655.00p

we start CHRT at Hold with reservations about EBITA margin progress. Our QQ/ LN HOLD 470.00p

European A&D team also has BA/ on Hold.

The DIP has been an overhang, but long-term fundamentals are attractive: The lack of UK KEY CHANGES INCLUDE:

Defence Investment Plan, which should have been published over 6 months ago, has weighed

TICKER RATING PRICE TARGET

on the sector, a fact not helped by current political leadership contests and rising long-term

borrowing costs. However, we are confident that the DIP will come (media suggests as soon AVON LN BUY 2,390.00p (2,330.00p)

as next week), and even if UK Defence spend falls short of targets, equipment spend can still BAB LN BUY 1,400.00p (1,670.00p)

grow at MSD/HSD rates, underpinning the revenue growth assumptions in our models. For UK CHG LN BUY 655.00p (660.00p)

Defence, we forecast a low-teens EPS CAGR over FY25-FY28F, with upside risk from capital

QQ/ LN HOLD 470.00p (575.00p)

allocation decisions.

Chemring still our most preferred: The majority of CHG's UK exposure comes through

National Security services rather than MOD, and we believe this element is seeing modest Exhibit 1 - We model an EPS CAGR in line with

improvements.