European defense companies poised to benefit from increased demand following recent events

From Morningstar: 2024-07-22 06:15:00

Europe is in a defense dilemma following recent events including an assassination attempt, Joe Biden’s presidential departure, and the selection of arch-isolationist JD Vance as Trump’s running mate. Companies supplying NATO with weapons, ammunition, and technology may see increased demand. BAE Systems and QinetiQ are poised to benefit.

BAE Systems shares have declined, but are expected to rally amid higher orders for fighter jets, naval vessels, and modern technology due to heightened tensions in Europe. Morningstar metrics show a wide economic moat and medium uncertainty rating. Funds like JP Morgan UK Equity Growth back BAE due to robust performance and growth potential.

QinetiQ, a UK-listed defense company focusing on high-tech and cyber assets, is positioned for growth. The company has seen strong order intake and double-digit revenue growth. Fund managers, including those from WS Amati UK Listed Smaller Companies and JOHCM UK Growth, are optimistic about QinetiQ’s potential in the evolving defense landscape.



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