Hensoldt’s 20% Rally Masks Cyclical Risks as Record Orders and Technical Breakout Collide

Hensoldt shares rally 20% as order intake doubles and profit jumps 47%, but analysts flag dependency on lumpy government contracts and land-system sensors.

The European defence sector is showing clear signs of a split. While heavyweight Rheinmetall struggles under the weight of a bearish UBS note and falling share price, mid-cap sensor specialist Hensoldt is racing ahead. The Bavarian group’s stock has surged 20% over the past seven days, hitting €89.44 as investors pile back in after a recent pullback.

The gains rest on solid operational momentum. Hensoldt’s order intake more than doubled in the first quarter to nearly €1.48 billion, while revenue rose by around 25% to €496 million. Adjusted operating profit jumped nearly 47%, underscoring how Europe’s heightened defence posture is converting into hard cash flows. The company’s record backlog now demands rapid capacity expansion to keep delivery on track.

Chart watchers have taken note as well. The stock confirmed a breakout above its 200-day moving average of €83.81, closing Friday at €88.00 with an RSI of 64.1 — a moderate but not overbought reading. The next meaningful resistance lies at €93, and with thin trading expected due to the Memorial Day and Spring Bank Holiday closures in the US and UK, some traders are recommending limit orders to navigate illiquid conditions.

Additional support came from last Friday’s annual general meeting, where shareholders voted overwhelmingly in favour of all management proposals, including a higher dividend for the past fiscal year. The move signals confidence in the company’s financial health and bolsters the case for a sustained recovery.

Yet not every market observer is convinced the rally can continue. Analysts at mwb research maintain a sell rating with a price target of just €62, warning that a large chunk of Hensoldt’s revenue depends on land-system sensors for platforms such as the Puma and Leopard. Such government procurement cycles are notoriously lumpy, and any budget slowdown in armoured vehicles would hit the company directly. The hype around software-based defence, while strategically logical, is unlikely to account for more than 10% of group sales by 2030 — hardly enough to justify a valuation premium today.

The onus now shifts to execution. Hensoldt must scale up its production capacity to work through its record order book without delays. If management delivers on that front, the stock’s current outperformance within the sector may have further to run — albeit with a wary eye on the cyclical headwinds that analysts say lie ahead.