RBC Starts BAE Systems Coverage at Sector Perform on Slower Growth Profile Amid Defense Tailwinds

07:23 AM EDT, 08/11/2026 (MT Newswires) -- RBC Capital Markets initiated its coverage of BAE Systems (BA.L) at sector perform, with a price target of 22 pounds sterling, noting the British aerospace and defense company's steady growth, albeit slightly below its peers. "While benefitting from wider defence tailwinds, we see BAE under-growing its European peers given its geographic and product mix (10% EBITA [compound annual growth rate] to 2030E vs. peer average 16%). Geographically, this is driven by high US/UK exposure (70% of sales) growing at +11% / 8% vs NATO Europe (12% of sales) growing at +16% [per annum]. Product-wise, we see a highly diversified portfolio, but with notable slower growing fixed wing platform exposure (37% of sales). Framed against our positive sector view, we see a P/E of 26x26E (vs peer average 27x) as fair and initiate at Sector Perform," the research firm said Tuesday. While US exposure underpins BAE Systems' earnings stability, RBC projects an 8% organic sales compound annual growth rate for full-year 2025 to 2030 will fall short of the expected 12% peer average. "With a supportive balance sheet and an appetite for modest leverage, we see up to GBP9bn of balance sheet potential by 2030E. We expect this to help drive further shareholder value by continued buy-backs and bolt-on acquisitions," the note said.