While Rheinmetall’s operational machine advances on multiple fronts, its share price tells a different story. The German defence giant is simultaneously launching series production of a new naval drone and forging a key energy partnership, yet its equity continues to trade well below analyst targets and its own recent highs.
The company’s strategic diversification was on full display at the Hannover Messe. Alongside demonstrations of remote-controlled logistics vehicles and the rugged “YARO Cobot” robot, Rheinmetall announced a new alliance with UK-based ITM Power. This partnership aims to develop a European network for synthetic fuels, a move extending the company’s reach beyond its traditional defence base. The trade fair also featured the newly created “Defence Production Park,” highlighting Rheinmetall’s focus on rapidly building security-critical manufacturing capacities in discussions with NATO.
A significant operational milestone was reached away from the exhibition halls. At the Blohm+Voss site in Hamburg, the Rheinmetall Kraken GmbH joint venture has begun series production of the “Kraken K3 Scout” maritime drone. The venture, formed with Britain’s Kraken Technology Group, will initially produce around 200 units annually. The facility is designed for rapid scaling, with the technical capacity to ramp up output to 1,000 drones per year if demand requires it. The eight-and-a-half-meter-long unmanned vessel can reach speeds up to 100 kilometres per hour, carry a 600-kilogram payload, and operate autonomously at sea for up to 30 days using Starlink satellite communication. Several NATO nations have already placed orders.
This expansion is underpinned by a formidable financial foundation. Management is targeting sales of up to €14.5 billion for the current year, with an operating margin approaching 19 percent. Crucially, nearly all of this projected revenue is already secured by the existing order backlog, providing exceptional visibility.
Should investors sell immediately? Or is it worth buying Rheinmetall?
Despite these robust fundamentals, investor sentiment remains cautious. The share price is currently hovering around €1,463, marking a slight daily loss and a year-to-date decline of nearly nine percent. The stock trades approximately 13 percent below its 200-day moving average and sits roughly 25 percent below its record high from September of last year. Chart technicians note that a sustained breakout above €1,750 would be needed to improve the technical picture.
Equity analysts, however, are looking past this weakness. Major banks maintain bullish stances, with Jefferies, Bernstein, and Berenberg all recommending the stock. Bernstein reaffirms an “Outperform” rating with a €2,050 price target, while Berenberg is even more optimistic, setting a €2,100 target and citing Rheinmetall’s dominant market position in ammunition and barrel artillery. The average price target among analysts stands at just over €2,080, implying significant upside potential.
Market attention now turns to forthcoming catalysts. Rheinmetall’s board will present first-quarter results on May 7th. Analysts anticipate a substantial jump in earnings per share to around €39 for the full year, up from €22.30 in the prior year. The company’s virtual annual general meeting will follow five days later, where management is expected to detail how quickly new ventures like the naval drone will contribute to revenue.
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