Forget about oil stocks:BAE Systems (LSE:BA.) share price is leading the FTSE 100 higher as war in the Middle East intensifies. Up 7% over the past week, the defence giant is the Footsie’s biggest riser. Sector rival Babcock International sits just behind (up 6%).

As the tragic war rolls on, it’s probable (in my view) that BAE shares will keep appreciating. But the US/Israel-Iran conflict isn’t the only reason the FTSE firm could keep climbing. Fears of Russian and Chinese foreign policy in the West are likely to keep driving defence stocks skywards.

At £23.10, BAE’s share price is has surged 1,710% since the Ukraine war kicked off in early 2022. It’s also up 45% over the past year. Can it keep rising over the coming 12 months? I may be confident, bu right now City analysts aren’t so sure.

Still rising

Today 18 brokers have ratings on the defence company. The average share price target is £22.72 per share which, after further strong gains on Thursday (12 March), is down 1% from current levels.

On one hand, this is perhaps unsurprising given BAE Systems’ valuation. Its forward price-to-earnings (P/E) ratio is 28.5 times, roughly double the 10-year average of 14–15.

But some analysts are confident of further healthy price gains despite that high rating. One broker has a 12-month price target of £26 per share, up 13% from current levels. With expected dividends thrown in, BAE shares could deliver a juicy total return of 15%.

My view is broker forecasts will be steadily upgraded in the coming weeks and months.

What needs to happen?

For BAE Systems to keep rising, the geopolitical instability we’ve seen in recent years will need to continue. Even then, there’s no guarantee of further price gains.

Why? For one, the defence sector remains plagued by major supply chain issues. Last month BAE warned these problems could cause “reduced productivity as a result of operational disruption, production delays and increased costs.” Signs the company is struggling to meet orders could be catastrophic for the share price, especially after recent gains.

That said, the company’s ability to manage these problems so far is a positive omen. Revenues rose 10% in 2025 to £30.7bn, while underlying operating margins increased 20 basis points to 10.8%. This pushed pre-tax profit 12% higher, to £2.9bn.

Are BAE Systems shares a possible buy?

While expensive, I think the FTSE 100 firm’s worth serious consideration today. Its order book surged £2.7bn last year to £63.1bn, further underlining its dominance in what is an extremely competitive marketplace. The company’s diverse product portfolio and wide geographic presence helps cement its place as a defence market leader.

My view is that unfortunately the world is likely to become more dangerous over the next year, not less. In this climate, weapons demand is only likely to climb, giving BAE Systems’ share price and those of other major manufacturers additional momentum.