BAE shares have rallied too strongly for Credit Suisse analyst Olivier Brochet.
Credit Suisse has downgraded BAE Systems to ‘underperform’ from ‘neutral’ as it highlighted that recent Saudi Arabia issues - financial impacts of low oil prices and political tensions with Iran - are 'not supportive' of the company receiving any large order from the Kingdom in the near future.
Analyst Olivier Brochet also said the share has rallied too strongly following recent US budget news.
“While BAE Systems will benefit from its 36% exposure to the US budget and the weakening of the GBP is also a boost to its US sales and profits translated back into sterling, however BAE Systems has been outperforming by 15% its US peers since the budget deal announcement in late October, despite benefitting less than them,” he said in a note. (end of excerpt)
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