The BAE share price is holding steady as investors continue focusing on the company’s fundamentals and after the new deal between the UK, US, and Australia. Share of BAE Systems are at 554p, which is about 6.4% below the August high of 588p.
US, UK, and Australia deal
BAE Systems is a leading industrial company that manufactures a variety of products for governments and private companies. The firm operates in several segments, including platform & services, air, electronic systems, and maritime, cyber & intelligence.
The company’s share price has remained relatively stable in the past few months because spending in defense has not been affected by the Covid pandemic. Indeed, many governments have increased their military spending.
In its most recent financial results, the company said that its revenue in the first half of the year rose from more than £9.87 billion to more than £10 billion while its underlying EBIT rose from £849 million to more than £1 billion. It also increased its order intake from more than £9.33 billion to more than £10 billion.
BAE Systems is now set to benefit after the latest deal between Australia, US, and UK. The US will provide Australia with the technology needed to build military nuclear weapons. Initially, the deal will see Australia build at least eight vessels.
BAE will likely benefit as it is already build the final three of seven nuclear-powered submarines. Indeed, in a statement on Thursday, the company’s management said that it “stands ready to support AUKUS discussions as they progress.”
BAE share price forecast
The daily chart shows that the BAE Systems share price jumped above the key resistance of 538p in July this year. This was a notable level since it had struggled moving above the price several times since last year. It was also the upper part of the ascending triangle pattern.
Now, the stock has formed a bullish flag pattern and is approaching the important level at 538p. This is a sign that it is forming a break and retest pattern. Therefore, in the long-term, the stock will likely resume its bullish trend. The initial level to watch will be at the YTD high of 590p. This view will be invalidated if the stock moves below 500p.