Newspaper article The Evening Standard (London, England)

BAE Systems Flies High on Hopes of [Pounds Sterling]40bn Saudi Deal

Newspaper article The Evening Standard (London, England)

BAE Systems Flies High on Hopes of [Pounds Sterling]40bn Saudi Deal

Article excerpt

Byline: TOM NICHOLLS

BAE SYSTEMS took off today amid reports that the firm is on the verge of clinching a lucrative deal to supply Saudi Arabia with Eurofighter jets.

The shares in the aerospace and defence company soared 17p to 4403/4p after the kingdom's defence minister was quoted as saying there were "no obstacles to signing the deal", which could involve up to 68 aircraft.

Backing BAE with a buy recommendation and a 12-month price target of 515p, Numis Securities said the deal could be worth $70 billion ([pounds sterling]40.4 billion).

The broker added that BAE is trading at a 6% discount to the sector - " unwarranted for a stock with average earnings growth of 15% over the next three years with the prospect of further upgrades".

Yet that was not enough to maintain the FTSE 100's upside momentum. The blue-chip index eased 18.3 points to 6006 as investors took profits in some of yesterday's outperformers. BG Group - lifted yesterday after signalling it had had a better-than-expected first quarter thanks the booming liquefied natural gas business - was off 10p at 7181/2p. Mining stocks were also lower, Rio Tinto falling 35p to 3018p and BHP Billiton losing 11p at 11071/2p.

A dip in pre-tax profits at the half-year mark for housebuilder Bellway, down 4p at 1229p, has failed to dent the confidence of its chief executive, John Watson.

Bellway is sitting on [pounds sterling]715 million of orders, has 92% of its sales targets in the bag with four months to go before the end of its financial year and more than 1500 homes for next year's production already reserved or contracted. Bellway sold 2958 new homes in the first half and is on course to sell about 7100 for the full year and 7500 for the year to July 2007. Watson has spent [pounds sterling]160 million on land with planning consent to help the firm towards a long-term target of 10,000 homes per year.

New-found confidence in the housing market has begun to spill over into the DIY sector as Topps Tiles today announced a 0.9% rise in like-for-like sales over the past five weeks. Topps shares moved 8p higher to 229p.

Under-pressure Kingfisher, which owns the B&Q chain of stores, added just 3/4p to 2383/4p. …

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