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BAE Systems stock at a glance
BAE Systems (LSE:BA.) shares have seen varied returns recently, with the price last closing at £21.10. Over the past year, the stock shows a 59.9% total return, and 2025 year to date performance of 20.3%.
See our latest analysis for BAE Systems.
The recent 1 day share price return of 4.0% and 7 day share price return of 9.6% suggest momentum has picked up again. This sits alongside a 1 year total shareholder return of 59.9% and a 5 year total shareholder return approaching 4x.
If defence is already well represented in your portfolio, this could be a good moment to look across the market and check out 24 power grid technology and infrastructure stocks as another potential source of ideas.
With the shares up strongly over 1 year and only a modest 3.8% gap to the average analyst price target, plus a small intrinsic value discount of 6.8%, is there still a buying opportunity here, or is the market already pricing in future growth?
Most Popular Narrative: 1.8% Undervalued
BAE Systems’ widely followed narrative points to a fair value of £21.49 versus the last close at £21.10, suggesting only a small valuation gap and putting the focus squarely on the story behind those numbers.
The company’s order backlog has surged to £75 billion, with a pipeline of new opportunities partly fueled by higher defense spending commitments across NATO, the US, UK, Europe, and Indo-Pacific (for example, the UK targeting 2.5% of GDP on defense by 2035 and Japan doubling spending by 2027). This is cited as providing visibility on future revenues and supporting topline growth over multiple years.
Curious how that order book feeds into projected growth, margins, and the future earnings multiple behind the £21.49 figure? The narrative leans on specific revenue runways, targeted profitability shifts, and a premium P/E assumption that is not typical for the broader sector. If you want to see exactly which financial assumptions are most influential here, the full narrative lays it all out.
Result: Fair Value of £21.49 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, you also need to factor in the risk that supply chain bottlenecks or tighter defence budgets on key contracts could challenge those growth and margin assumptions.
Find out about the key risks to this BAE Systems narrative.
Next Steps
If this mix of optimism and caution resonates with you, take a moment to review the data yourself and weigh both sides carefully. Then check out 3 key rewards and 1 important warning sign to see how the full risk and reward picture stacks up.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include BA.L.
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