Broker snap: BAE's IMS has robust feel to it, says Jefferies

8th May 2013 11:53

BAE Systems announced Wednesday it was trading in-line with expectations in the first four months of the year.The British multinational defence, security and aerospace company also anticipates a modest rise in earnings this year, subject to US defence budgets. Analysts at Jefferies International said the company's interim management statement had a "robust feel to it".While sequestration in the US may cause disruption to BAE's business it will not significantly blow the company off course this year, the broker added."Looked at most simply, at the same stage in fiscal year (FY) 2012 BAE had secured just £1.1bn of non-UK/US orders, but finished FY12 strongly and has made a healthy enough start - orders worth £2.3bn - to FY13 with more in the wings, in our view," the analyst said."It is still possible that cuts to future US defence spending could be of a magnitude and scope that make it challenging for BAE to grow its revenues in FY13 and FY14, but we remain of the view that BAE did not lightly announce a three-year share repurchase programme of up to £1.0bn."The broker recommended a 'buy' rating and a target price of 350p.