BAE Systems stock forecast
BAE Systems' weighted forecast reaches 1867.04 GBp in October 2029; the bear, base and bull cases carry 30%, 50% and 20% probabilities. It hinges on BAE Systems converting its backlog into delivered output, retained margins and ordinary cash.
Where could BAE Systems' shares go?
The weighted forecast keeps BAE Systems close to today’s price, with modest positive total return only by October 2029. The weighted prices are 1806.07 GBp in October 2027, with a negative 2% return including dividends, and 1826.09 GBp in October 2028, with a 1% return. By October 2029, the weighted price reaches 1867.04 GBp, a 6% total return.
The range is much wider than the weighted outcome: by October 2029, the bear case is 1083.54 GBp and the bull case is 3313.14 GBp, against today’s 1882.50 GBp. The probabilities are 30% bear, 50% base and 20% bull.
| Case | Probability | October 2027 | October 2028 | October 2029 |
|---|---|---|---|---|
| Bear | 30 % | 1270.00 (-31 %) | 1129.33 (-36 %) | 1083.54 (-37 %) |
| Base | 50 % | 1860.44 (+1 %) | 1820.55 (+1 %) | 1758.71 (+0 %) |
| Bull | 20 % | 2474.26 (+34 %) | 2885.10 (+58 %) | 3313.14 (+84 %) |
| Weighted | 100 % | 1806.07 (-2 %) | 1826.09 (+1 %) | 1867.04 (+6 %) |
What has to go right for BAE Systems, and what could go wrong?
The base earnings row is £2,534m in October 2027. It rises to £2,726m in October 2028 and reaches £2,926m in October 2029. The base margin path moves from 7.8% to 8.1%, reflecting delivery of most of management’s upgraded plan without assuming a dramatic recovery in Maritime. The bear row gives £2,247m at the first date and £2,271m at the second, because advances unwind and fixed-price ship work absorbs costs. It reaches £2,342m at the last date. The bull starts at £2,738m and reaches £3,068m in the second year, then £3,393m, because capacity, suppliers and accepted deliveries convert demand into operating leverage. Maritime return on sales had fallen to 6.1%, which argues against making the bull case the central case.
How much cash does BAE Systems really make?
Free cash flow is the cash left after the deductions chosen by the company or analyst. BAE’s own measure includes joint-venture dividends and deducts selected capital, lease and interest items. A stricter measure deducts gross capital spending, lease payments and interest paid. Stock-based pay creates another adjustment: it is not a cash payment at grant, but it compensates employees and therefore belongs in an economic cash assessment.
| 2025 | 2024 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|
| Cash from operations | 3,432 | 3,925 | 3,760 | 2,839 | 2,447 |
| − Capital spending | 1,103 | 1,163 | 957 | 693 | 612 |
| = Free cash flow | 1,630 | 2,029 | 2,155 | 1,641 | 1,371 |
| − Stock pay | 174 | 144 | 110 | 101 | 92 |
| = Real free cash flow | 1,456 | 1,885 | 2,045 | 1,540 | 1,279 |
| Real free cash flow, % of revenue | 5.1% | 7.2% | 8.9% | 7.2% | 6.6% |
What does an investor pay today for BAE Systems?
Revenue rose from £19,521m in 2021 to £28,336m in 2025, while operating margin fell from 12.2% to 10.3%. Computed free cash flow—cash from operations minus capital spending—peaked at an 8.9% margin in 2023 and fell to 5.1% in 2025. Net debt fell from £5,034m in 2024 to £3,847m in 2025. Computed free cash flow per share fell from 66.57p in 2023 to 48.04p in 2025. At 1,882.50p, the shares trade at 27.0x trailing earnings and 19.6x next-12-month earnings, with a 2.9% free-cash-flow yield and 1.9% dividend yield.
| Today (Oct 12, 2026) | |
|---|---|
| Share price | 1882.50 |
| P/E, last 12 months (calculated) | 27.0x |
| P/E, next 12 months (calculated) | 19.6x |
| Free cash flow yield (calculated) | 2.9% |
| Real free cash flow yield (calculated) | 2.6% |
| Dividend yield (calculated) | 1.9% |