It's tempting I must admit, just reluctant to commit any more funds at mo, see how the yanks react today :0)

Resistance clearly @ 460.0 perhaps a retrace to see if support is valid @ 440.0 then go long skinny? Between devil and deep blue sea. Can't believe a word Putin says or doesn't say.

The Ukraine ceasefire may change the scenario short term?

Sorry Chris - misread your full post - I don't like gaps - call it 440p :-)

Investec note today:
"We are concerned that we have not yet seen the end of BAE’s negative earnings momentum, even if rising geopolitical concerns may explain the strong re-rating in recent months. We see limited growth opportunities to drive underlying earnings in the medium term, despite the heightened tensions, and downside risk to margins. The shares appear cheap on a PE basis, but less so on an adjusted 2015E EV/EBITA of 11.9x. In our view, a c.4.3% dividend yield does not compensate for downside earnings risk. Sell.
Forecasts: Post last week’s trading update, we reduce our FY14-16E EBIT forecasts by c.3% to reflect the £30m charge for commercial shipbuilding highlighted in the IMS, pricing pressure and the potential for further execution issues, which are difficult to predict (this sees our FY15/16E EBIT margin forecasts come down by 30bps). Our lower EBIT forecasts are partially offset by a lower tax rate (20%, down from 22%). Our updated FX forecasts (£1=$1.66 in FY14E from $1.71, and $1.63 for FY15E) have also been factored in. We cut our EPS forecasts by 1-2%
Geopolitics/budgets: Strategic statements and symbolic/limited air strikes do not portend a major change in Western defence budgets, in our opinion. However, rising geopolitical tensions in the Middle East and Eastern Europe have increased the likelihood of budgets stabilising in 2015/16 and beginning to grow at a measured pace thereafter. We do not see BAE as a major beneficiary if the conflict against IS in Iraq and Syria continues at current rates. However, investors are using BAE as the only liquid UK proxy in which to play increased geopolitical tensions in the region, in our view. We believe that weak fundamentals will override this kneejerk reaction. If the current US Continuing Resolution carries on into 2015, then we see further downside risk to earnings. We downgrade to Sell (from Hold)."

StockMarketWire.com
BAE Systems has entered into a definitive agreement to acquire Perimeter Internetworking Corp, which trades as SilverSky, a commercial cyber service provider, for $232.5m on a cash free and debt free basis.

SilverSky is a leading independent cloud-based managed security services provider operating in the fast-growing cyber security market providing services including email protection, network security and managed applications. Its customer base includes approximately 5,500 customers in the financial services, retail, healthcare, energy, critical infrastructure and manufacturing sectors.

SilverSky is largely focussed on the US market with a developing business in Asia and Europe. The business currently employs around 400 people with its headquarters in the Greater New York Area and principal operations in the US and the Philippines.

SilverSky is expected to generate sales for the 12 months ended 31 December 2014 of approximately $75m (£46.6m).

The proposed acquisition is expected to be accretive to earnings in the third year following closing with post tax returns expected to exceed BAE Systems' cost of capital in the fourth year following closing.

BAE Systems chief executive Ian King said: "The acquisition of SilverSky enhances our strategy to grow BAE Systems' Applied Intelligence commercial cyber security business. SilverSky has an established sales force, a complementary suite of scalable products and a large installed customer base, providing a proven route to commercial markets in the US and other countries for our combined capabilities.

"SilverSky's cloud-based email and network security solutions, its highly skilled resource in marketing and engineering, plus an experienced management team are an ideal fit for Applied Intelligence. Together, the enlarged business will offer corporate clients a suite of products and services to protect critical information and networks and detect cyber threats and financial crime. The enlarged business has outstanding growth opportunities."

The acquisition will be funded from BAE Systems' existing cash resources. The transaction is conditional upon receiving certain regulatory approvals and is expected to close before the end of 2014.

In the fervent hope of a Santa rally punt long on the spreads @ 469.32

Had a Limit Buy filled this morning @ 446.0 tight stop 436p

Stop to entry for risk free trade.

Stop to 456 to lock in + 10

Stop to 460 to lock in + 14 out this morning locking in profits.

Stopped out. Limit long left @ 465.0 stop 455.0

Filled.

Stop to entry for risk free trade.

The British-based defence contractor said in a statement the programme aims to engineer and produce a limited initial number of the vehicles, called the Armored Multi-Purpose Vehicle (AMPV), to replace the Vietnam War-era M113.

The initial 52-month term of the contract, worth about $383 million, calls for 29 vehicles to be produced among five variants, with an option to follow with 289 more, for a total contract value of $1.2 billion, BAE said in a statement.

"The AMPV capitalizes on proven Bradley and M109A7 designs, meeting the Army’s force protection and all-terrain mobility requirements while enabling the AMPV to manoeuvre with the rest of the Armored Brigade Combat Team (ABCT)," the statement said.

Work is expected to start immediately, mainly at the company’s facilities in York, Pennsylvania, and Sterling Heights, Michigan, it said.

The programme was aimed at ultimately replacing 2,897 M113 vehicles, at the brigade and below level, the U.S. Army said in a statement announcing the contract award. It said replacements for another 1,922 M113s supporting Echelons Above Brigade may have different requirements, which had yet to be decided.

(Reporting by Eric Walsh; Editing by Eric Beech)

http://uk.reuters.com/article/2014/12/24/uk-bae-systems-contract-vehicle-idUKKBN0K11UW20141224

BAE in digital anti-tax-fraud push. (pg 13 Financial Times)

The European defence company is in talks to sell its NetReveal anti-tax evasion software to central European governments and expects to double its client base in the next two years.

Results 19th Febuary, grinding slowly higher. Volume required.

Final Results

UBS note today:
"Downgrade to Neutral and off Key Call list after share price performance. As the share price approaches our price target of 540p, we do not believe there is sufficient upside potential to maintain the Buy rating and are downgrading to Neutral and removing from the UBS Key Call list. Our price target remains unchanged although our 2015e EPS is reduced by 3% due to lower margin forecasts, offset in 2016e by translation of US$ revenues at $/£ 1.50. We also believe that there is potential downside to sentiment as we believe that (a) the US budget will ultimately end up growing 2-4% (vs the 8% in the budget submission on 2nd February) and (b) increasing concerns over UK budget cuts. On the other hand, we remain optimistic that a Saudi Batch 2 Typhoon order could come through this year or early 2016.
US budget euphoria and UK budget concerns could hurt sentiment. We believe that the recent proposed 8% yoy increase to FY16 US budget will likely run into the sequestration wall and ultimately expect 2-4% growth. If we are wrong and the budget goes through as submitted, we estimate circa 3% upside to the BAE Systems fair value. Meanwhile, we are increasingly concerned about the outlook for the UK defence budget – in their manifestos, neither major party committed to 2% of GDP defence spend, while the SDSR is expected later in the year and is unlikely to be positive as we expect it to be budget driven rather than threat driven.
Cash returns remain attractive: The cash returns to shareholders (4% dividend yield + share buy-back) remain attractive, but offer limited upside to the European average of 3.7%. We expect the share buy-backs to continue for the rest of the year but believe new programmes may be more difficult in the face of increasing pressure from the pension regulator.
Valuation: trades on 12.4x ’15e EV/EBITA vs. 11.8x for UK & 11.4x for US peers. Our price target of 540p is based on a fundamental valuation of 570p using cash conversion of 88%, 5 year profit growth of 2.5% and a WACC of 9%, implying a fair value multiple of 13x 2015e EV/EBITA, less a 5% discount for defence budget uncertainty.

Been hammered, well oversold. Tentative long on spreads yesterday @ 454.02.