BAE is the place to be: high-end defence, UBS says

22nd Sep 2014 15:03

Analysts at UBS believe BAE Systems is in the right segments of the defence industry – aerospace and high-end technology – to capitalise on the increased emphasis on higher technology military operations.That is manifestly the case when one looks at the recent 50 nations for Air Power operations to counter Islamic State (IS) in Iraq and Syria. BAE has the right mix of businesses to capitalise on them (51% Air, 25% Sea, 17% Land and 7% Cyber) UBS analysts think.Furthermore, as a result of rolling forward its five-year profit forecasts to a fifth year its estimate of the five-year growth rate rises from 1.9% per annum to 2.2%, as the company moves further past the 2014-16 plateau in defence spending and more towards GDP-type growth towards the end of the decade.For that reason the broker´s price target on the shares rises to 505p from 460p previously.As well, the aerospace and defence manufacturer´s 4.4% dividend yield is decsribed as ´rock solid´.On the basis of all of the above the Swiss broker maintains its 12-month 'buy' recommendation on the shares.