Should investors consider buying BAE Systems shares now they're back below £20?

The pullback below £20 reopens the question of whether BAE Systems offers enough growth to justify its valuation. The stock has fallen from above 2,350p in March to around 1,950p as investors weigh risk and upside. In the May 7 trading update, BAE cited stronger defence spending across key markets and a solid start to 2026, guiding 2026 sales growth of 7-9%, underlying EBIT growth of 9-11%, and free cash flow over £1.3bn. At 1,950p, a potential 10% earnings rise would lift EPS to about 82.7p, equating to roughly 23.6x. Broker targets average around 2,312p, and management highlights opportunities in space, missiles, drones, and naval platforms.