EFTA Document EFTA01385521

> Energy, Materials & Industrials BAE Systems - Jaime Rowbotham, BUY, close 574p, 730p tgt, 27% upside ■ We see scope for 63% TSR to 2020. With FCF forecast at £1 .35bn in 2020, if the stock were to trade on a 5% yield then those buying now would make 18% TSR per year. Thus now is an attractive entry point into a multi-year defence spending up-cycle. ■ Flat earnings are masking a compelling growth story. We forecast EBIT growth at 5% at the company level. ■ US strength (9% EBIT CAGR to 2