eyeQ: are BAE Systems shares cheap after sell-off?
Experts at eyeQ have used AI and their own smart machine to analyse macro conditions and generate actionable trading signals. Now it looks at whether the price drop is justified.
11th November 2025 11:34
by Huw Roberts from eyeQ
The BAE Systems stand at the Defence and Security Equipment International (DSEI) exhibition in London in September 2025. Photo: Leon Neal/Getty Images.
“Our signals are crafted through macro-valuation, trend analysis, and meticulous back-testing. This combination ensures a comprehensive evaluation of an asset's value, market conditions, and historical performance.” eyeQ
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BAE Systems
Macro Relevance: 76%
Model Value: 1,986.05p
Fair Value Gap: -9.24% discount to model value
Data correct as at 11 November 2025. Please click glossary for explanation of terms. Long-term strategic model.
BAE Systems (LSE:BA.) provides a trading update tomorrow. The defence contractor has had a great 2025 as governments in the West ramp up defence spending.
The BAE stock price and macro have not been aligned over recent months. September’s rally moved ahead of macro fundamentals. That took the stock 22% rich on our metrics. There was no official signal because, at that point, macro relevance was too low, but it is interesting to note that the stock price peaked on 2 October and subsequently sold off about 12%.
Macro conditions turned more constructive over October - eyeQ model value rose 24%. Momentum has stalled a little bit in November, but model value remains just shy of 2,000p.
And crucially, BAE Systems is back in a macro regime for the first time all year. Macro’s explanatory power has risen 10% in the last week alone and today it explains 76% of moves in BAE’s stock price.
That means the sell-off over the past few weeks is not justified from a macro perspective. And the stock now sits nearly 10% cheap to the broad macro environment. That’s not quite enough to trigger a bullish signal, but it’s getting very close.
Tomorrow’s update will be key from a company fundamentals perspective. But, for the first time in 2025, macro also matters.
And we’re getting very close to macro signalling. We’re at attractive levels to add to this blue-chip company that provides exposure to the rearmament theme - a theme that’s going to be around for years yet.
Source: eyeQ. Past performance is not a guide to future performance.
Useful terminology:
Model value
Where our smart machine calculates that any stock market index, single stock or exchange-traded fund (ETF) should be priced (the fair value) given the overall macroeconomic environment.
Model (macro) relevance
How confident we are in the model value. The higher the number the better! Above 65% means the macro environment is critical, so any valuation signals carry strong weight. Below 65%, we deem that something other than macro is driving the price.
Fair Value Gap (FVG)
The difference between our model value (fair value) and where the price currently is. A positive Fair Value Gap means the security is above the model value, which we refer to as “rich”. A negative FVG means that it's cheap. The bigger the FVG, the bigger the dislocation and therefore a better entry level for trades.
Long Term model
This model looks at share prices over the last 12 months, captures the company’s relationship with growth, inflation, currency shifts, central bank policy etc and calculates our key results - model value, model relevance, Fair Value Gap.
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