BAE and other defence stocks look cheap after ‘sell first’ pullback, says Morgan Stanley

European defence stocks have fallen out of favour in recent months despite a strengthening backdrop for military spending, prompting Morgan Stanley to flag that “the buy case for the sector is as strong as ever”. The bank reiterated its positive stance (arguing the recent weakness presents an attractive entry point), noting that shares are on average about 20% below recent highs and valuation multiples have slipped to around 20 times earnings.