Farnborough Air Show: BAE Systems: DIP Reassuring, US Portfolio Well Positioned

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Farnborough Air Show: BAE Systems: DIP Reassuring, US Portfolio Well Positioned

USA | Aerospace & Defense Electronics

BAE Systems EquityJulyResearch21, 2026

FLASH NOTEFarnborough Air Show: BAE Systems: DIP

RATING HOLDReassuring, US Portfolio Well Positioned

PRICE 1,875.00p^

We met with Jennifer Bowden (IR) and Barron Beneski (IR) of BAE Systems. Key

takes: 1) BAE is reassured by the UK Defence Industrial Plan with key programs PRICE TARGET | % TO PT 2,100.00p | +12%

including submarines, Type 26, munitions and GCAP well funded; 2) Uncrewed 52W HIGH-LOW 2,360p - 1,529p

systems a growing focus; 3) Eurofighter export opportunities remain active; 4) FLOAT (%) | ADV MM (USD) 97.6% | 178.75

BAE remains aligned with key US defense spending priorities; and 5) P&S margin MARKET CAP £54.9B | $73.8B

progression continues. TICKER BA/ LN ^Prior trading day's closing price unless otherwise

noted.

DIP seen as supportive on submarines, Type 26, munitions, and GCAP. BAE see the UK's Defence

Industrial Plan (DIP) as reassuring, highlighting continued funding support for submarines, Type

26, munitions and GCAP. Uncrewed air systems and CCA are areas the UK is expected to focus on

going forward. Type 83 cancellation seen to have limited impact, as current shipyard capacity is

largely occupied by UK and Norwegian Type 26 programs.

GCAP on track with funding secured. GCAP funding secured with the DIP is key to progress,

with Japan pushing for the timeline to remain on track. The door remains open to additional

partners in the fallout from FCAS, although workshare discussions would become more complex

as time passes, and might eventually impact the program timeline. BAE believes GCAP remains

well positioned relative to competing programs given that it will likely be first to market.