IC Mag18 Sep 2015 11:21
The Investors Chronicle awards BAE Systems a ‘buy’ rating in the wake of Kuwait’s decision to commit to an €8bn deal for 28 Eurofighter Typhoons. BAE had previously threatened to close the Typhoon production line if no more export orders were secured. The Kuwait deal, coupled with growing speculation that Bahrain and Saudi Arabia are next in line, suggests geopolitical tensions in the Middle East will revitalise interest in the high-tech aircraft. At 451p, shares in BAE trade at a hefty discount to peers on 11 times forecast earnings. Given the 4.5% dividend yield, £37bn order backlog and reviving defence markets, that looks unjustified