We use cookies to offer a better browsing experience, analyze site traffic, personalize content, and serve targeted advertisements. By clicking accept, you consent to our privacy policy & use of cookies. (Privacy Policy)

BAE Systems Share Price Rally Has Stalled. What Now?

BAE Systems share price has lost its bullish momentum in the past few weeks. After rising to the year-to-date high of 845p on July 4th, the stock has slipped to about 800p. Still, it remains at about 44% this year, making it one of the top-performing stocks in the FTSE 100 and FTSE 250. 

Is BAE still a good buy?

BAE Systems is a leading company in the defense industry that manufactures and sells some of the most advanced products. The firm, which is the biggest defense contractor in Europe, has capabilities across all military areas like air, land, marine, and even cyber. 

Notably, BAE’s business is highly diversified considering that it sells its products to countries like the United States, Europe, and Saudi Arabia. BAE is among the top ten biggest defense contractors in the US.

This geographical diversification has become an important thing for BAE as the British pound crashes. Therefore, analysts believe that the company faces a positive foreign exchange tailwind. For one, the British pound has crashed by more than 20% this year.

Another important catalyst for the BAE share price is the rising demand for defense spending. With the war in Ukraine continuing, most countries are boosting the amount of money they spend on defense. Besides, most countries have seen their stockpiles of weapons crash in the past few months.

And on Tuesday, the company announced a partnership with EPE to build autonomous capabilities. The firm said:

“It’s critical for businesses like ours to collaborate with Australian industry so we can successfully support the ADF and, working with companies such as EPE provides opportunities to work as one team, creating an environment that fosters innovation.”

Still, the main challenge for BAE is that the company’s cost of doing business surged. For one, the prices of key commodities and wages have risen substantially recently.

BAE Systems share price forecast

The daily chart shows that the BA share price has been in a slow bullish trend in the past few months. Along the way, the stock formed an ascending channel that is shown in black. It has moved to the 25-day and 50-day moving averages. The stock’s Relative Strength Index (RSI) has moved to the neutral point.

Therefore, the stock will likely remain in this range in the near term as investors wait for the company’s earnings in November. The key support and resistance levels will be at 700p and 850p.

BAE Systems share price