JPMorgan lifts BAE Systems price target ahead of 'major' news flow

Expecting major news flow from BAE Systems in the coming months, JP Morgan upped its target price on the defence, security, and aerospace giant to 600p on Wednesday.

Increasing its earnings per share estimates for 2018-20 by 1%/5%/6% to reflect a "better USD/GBP rate, a better-than-expected 2018 US defence budget and a slightly less cautious view of the margin dip in its air division over the next three years, JP Morgan saw fit to move its price target up from 550p.

However, the bank kept BAE at 'underweight', saying that it considered the contractor's valuation to be "quite full", with a lot of potential good news already discounted.

"BAE might win large new contracts in the US, Middle East and Australia. Mostly these would impact sales in the 2020s but clearly contract wins are good news," the broker said.

"We believe the share price rally of the last three months has to some extent discounted the potential wins," JP Morgan added.

At 1230 BST, the shares were up 0.3% to 648.40p.