BAESY - Recent Developments Help Raytheon But They Help BAE Systems More

• Raytheon's substantial commercial exposure sees light at the end of the tunnel with the vaccine news, setting off its recent rebound.
• But Raytheon will still have to deal with slowed investment for a long-time, while defence pure-play BAE Systems' concerns have largely evaporated.
• Vaccine promises relief for BAE's Middle Eastern exposure, and the Biden win reduces risks for foreign contractors.
• They also have more diversified tax exposures to mitigate the inevitable Biden tax hikes.
• We are still overweight defence pure-plays, but we add foreign BAE Systems to the list while their discount is still the same as Raytheon's.

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