UBS flags Rolls‑Royce and BAE Systems as top aerospace & defence picks, citing ~40% and ~26% upside amid Middle East conflict.
Rolls‑Royce’s long‑haul engine servicing benefits from tighter wide‑body market and limited impact on flying‑hour growth despite regional tensions.
BAE benefits from 43% US and 10% Gulf revenue, positioning it to profit from rising defence spending in Europe and Gulf.
UBS expects the picks to deliver returns over a three‑to‑six‑month horizon as oil prices stay elevated and inflationary pressures persist.