Skip to content

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Could BAE shares benefit from tensions in the Ukraine?

With the threat of war in Eastern Europe, are BAE shares a buy?

Are BAE shares a buy? Source: Bloomberg

With the Western world waiting with baited breath to see what the Russians will do in the Ukraine, now could be a good time to look again at BAE Systems PLC. The Russian Federation has amassed 100,000 troops on the Ukrainian border and, despite President Vladimir Putin’s insistence that the state has no intention of invading, an invasion could be imminent. With the US planning to instigate the “mother of all sanctions” if it does, shares in the British defence contractor look likely to benefit.

The shares trading strongly in January, hitting a high of 608p, but at 572p have fallen back 6% on profit-taking. They are also one of the top dividend payers in the FTSE100, offering a 4% yield. In tough financial times, defence stocks can also offer a safe haven as they can be less subject to economic headwinds and the ravages of inflation.

Fighting fit

BAE full-year results are due out on 24th February. The company has recently announced a handful of contract wins and updates, including winning a $169m production contract from the US Marine Corps to supply its amphibious combat vehicles and a $14 million radio communications contract from the US Intelligence Advanced Research Projects Activity (IARPA) to develop tools to decipher radio frequency (RF) signals. It also recent hit key production milestones in its deal with Lockheed Martin to supply the vehicle management computer (VMS) and active inceptor systems (AIS) for the F-35 jet, delivering its 3,000th VMC and 1,000th AIS.

In addition, BAE has submitted a bid with the Swedish Defence Materiel Administration to supply its CV90 infantry fight vehicles to the Slovak Republic.

Robust pipeline

"Demand for our capabilities remains high and we have a strong pipeline of opportunities across our broad geographic portfolio that will enable our skilled, global workforce to deliver capabilities which will support our customers in responding to the evolving threat environment,” chief executive Charles Woodburn told investors at the trading update in November.

The pipeline includes providing life-cycle sustainment and technical support to the Limited Interim Missile Warning System program – worth up to $872m over 10 years – a five-year deal to provide Systems engineering and integration support services to the US Navy – worth up to $478m – and two Typhoon contracts with the British government worth a total of £355m.

West hikes defence spending

BAE said in its trading statement that it has a strong pipeline of contracts and that most of the countries in which it operates are increasing defence spending to “counter evolving threat environments.” This includes the US, which voted last year to increase its defence budget to $740bn a year from $715bn, Australia, France and Germany.

Deutsche Bank recently rated the shares a buy, setting a price target of 670p.

The downside with defence firms is that projects can often be hit by delays as they are reliant on the slow-moving bureaucracy of government spending decisions and can be affected by technology issues. BAE also depends on three main customers – the US, British and Saudi Arabian governments – for the majority of its revenues and cash-flow can be lumpy. However, with a decent pipeline of contracts, positive earning guidance for the full-year results of an increase in EBIT (earnings before interest and tax) of 6-8% and strong cash-flow generation – a portion of which will be returned to shareholders the shares look a solid buy.

Go short and long with spread bets, CFDs and share dealing on 16,000+ shares with the UK’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.

* Best trading platform as awarded at the ADVFN International Financial Awards 2021

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Act on share opportunities today

Go long or short on thousands of international stocks with spread bets and CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take advantage while conditions prevail.

Live prices on most popular markets

  • Equities
  • Indices
  • Forex
  • Commodities
website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.

" >


Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.