Market Report: BAE Systems slides as hopes wane for Saudi Arabia jets orderComments Off on Market Report: BAE Systems slides as hopes wane for Saudi Arabia jets order
Think Saudi Arabia will spend billions on British fighter jets? Think again, says Credit Suisse.
Its analysts slashed their rating on BAE Systems, 6.5p cheaper at 502.5p, to underperform, making the aerospace and defence giant one of the only blue-chip fallers.
The market has been waiting for a big order of its Typhoon jets from Saudi, which makes up about 20% of BAE’s revenues.
But Credit Suisse’s Olivier Brochet said he cannot see David Cameron giving the green light to sell any new military gear to Saudi Arabia as it would make him “an easy target” for anti-war Jeremy Corbyn and his reshuffled Labour party.
“It would… come at a significant political cost to the Prime Minister at a moment when then UK enters into the EU referendum campaign,” Brochet added.
The downgrade comes after a good start to the year for BAE, which had enjoyed upgrades from JPMorgan and RBC Capital.
Investors came up for air today as the FTSE 100 rallied 77.92 points to 5857.84 after sinking for three days in a row, with hopes that China might boost its economy with new stimulus measures.
The optimism lifted the miners, including Anglo American, which jumped 20p or 8.6% to252.65p as the price of copper recovered.
Renewed speculation that Amazon could swoop for Ocado propelled the online supermarket up 40.2p, or 17%, to 282.7p.
Aldermore rose 3.71p to 191.71p as broker Numis urged clients to buy shares in the challenger bank, but Revolution Bars, the group behind the bar chain fondly known as “Vodka Revs”, dipped 2p to 180p despite lifting first-half same-store sales by 2.7%.
Panther Securities retreated 2.5p to 365p even after maverick chairman and majority owner Andrew Perloff confirmed the property company would pay a special dividend. Perloff said calls from shareholders for a payout reminded him of entertainer Al Jolson’s song “Swanee”.
Tiddler Goldcrest Resources was unchanged at 0.06p after buying Ghana-focused gold miner Taoudeni Resources with shares worth £330,000 ahead of its planned move to AIM.
Gavin Burnell, who masterminded the AIM float of Greek software firm Globo but then quit after executives admitted to faking data, is chairman Goldcrest. He stands to benefit from the takeover as he is also the largest shareholder of Taoudeni.