Britain’s Ministry of Defence has announced a project with BAE Systems (GB:BA) to develop a supersonic fighter jet, the first developed for the RAF in almost 40 years.
The British Government is to work with Japan on the project, which will also see engines developed by Rolls Royce (GB:RR).
The Tempest program, which was launched in 2015, aims to gradually replace the Eurofighter Typhoon by 2035.
Supersonic technology
Ben Wallace, Secretary of State for Defence said, “I am delighted that the UK, alongside Italy and Japan, is working on similar combat air journeys together.
“Our work with Japan and Italy on cutting-edge technology like this shows the benefit of our alliances across the world. This program will go on to attract opportunities for many more great minds and talent from across the UK.”
BAE aims for its new fighter jet to be in the air within the next five years, the company said.
Herman Claesen, from BAE, said “The new prototype could propel the company’s technology forward in similar-sized leaps to the development of the jet engine or the Concorde passenger jet.”
The share prices reacted positively and gained 1.5% on Monday. Overall, the shares are up by 48.4% YTD. The shares performed strongly in the wake of the Russian invasion of Ukraine.
BAE Systems provides the world’s most advanced defence and security solutions for air, land, and navy.
View from the City
According to TipRanks’ analyst rating consensus, BAE Systems’ stock has a Moderate Buy rating. The stock has ratings from six analysts, out of which four are Hold and two Buy recommendations.
The average BAE price target is 881.5p, with an upside potential of 9.3%. The analyst price targets range from a low of 735p to a high of 984.5p.
Conclusion
Considering the share prices in the last few years, shareholders seem happy with the company’s overall growth. The outlook also looks promising as the company expects more opportunities from increased defence spending in Europe and other markets.
For the year-end in December 2022, BAE expects group sales to be up by 2-4% and underlying EBIT to increase by 4-6%.
