BAE looks to overcome problems

BAE Systems has had to deal with a number of issues over the past few years, as regulators have focused on the company’s sales tactics.

The company will also have to absorb a number of changes over the coming 12 months, with current chairman Sir Richard Oliver stepping down and long-serving Centrica employee Sir Roger Carr set to take over.

December was not a kind month to the British defense company, as a deal to sell Typhoon jets to the UAE, which management had been sure was secured, ultimately fell through. This lost the firm £6 billion. Although the Saudi government has a number of contracts with the company, there had been hopes that another deal to supply 72 of the Typhoon fighter jets could be reached. However, with investigations potentially involving Saudi royals still to be resolved, it could be some time before this is rubber stamped.

One area of uncertainty that is now clearer is the US budget, specifically the confirmation of $500 billion in defence spending; roughly half the total global-spend in this area.

The overall bullish trend for BAE Systems is still in place, but any break below 415p and then 404p could signal a change in sentiment. Progress over the current discussions regarding the Saudi Typhoon deal is likely to go a long way in influencing the longer-term direction of this stock.

BAE systems chart

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