1304 GMT - BAE Systems is Vertical Research Partners's top pick in defense, given the capacity for valuation premium as investors keep looking for more European defense and export exposure, the research firm says. Europe, Asia and Middle East will see the strongest increases in defense demand and BAE has the greatest non-U.S. exposure of its peer group at 51% of sales, Vertical says. The addition of Ball Aerospace increases its exposure to the growing military space market. Vertical says BAE is one of the few defense companies that can improve margins, as higher-margin areas like Electronics enjoy strong growth and it rolls off development work into higher-margin production work. Exports should also help, as sales into these non-domestic markets tend to be higher margin. Vertical increases price target on the stock from GBP12.10 to GBP13.30. (alistair.macdonald@wsj.com)
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01-18-24 1218ET
