Rheinmetall at a Crossroads: Berenberg Cuts Target While Barclays Stays Bullish on Record Orders

Rheinmetall's share price nears 52-week low even as order backlog hits €73 billion. Berenberg cuts target, Barclays says ‘Overweight’ amid naval and drone expansion.

The gulf between Rheinmetall’s burgeoning order book and its slumping share price has never been wider. On Friday the stock closed at €1,123.80, perilously close to its 52-week low of €1,118.00, after losing nearly 30% of its value since the start of the year. Yet beneath the surface of this relentless sell-off, analysts are delivering sharply divergent verdicts on the defence group’s prospects.

Berenberg struck a pessimistic chord, slashing its price target from €2,100 to €1,750. The main culprit is the Boxer-Arminius programme, where the bank has cut its order expectations from €32 billion to €23 billion. These headwinds are compounded by self-inflicted wounds: delays in gunpowder deliveries are costing the company a three-digit million-euro sum, while a halt in military truck production is further squeezing revenue. The bottom line, Berenberg warns, is under serious pressure.

Across the Channel, Barclays sees things differently. The British bank rates Rheinmetall “Overweight”, arguing that the broader European defence cycle remains intact and that the recent sector correction has been overdone. Management under CEO Armin Papperger has promised a sharp acceleration in growth from the current second quarter, driven by large orders for naval systems and vehicles. The annual guidance stands: up to €14.5 billion in sales with an operating margin of around 19%.

Rheinmetall’s newest division, Naval Systems, is already making its presence felt. The integration of several major North German shipyards – including the historic Blohm+Voss site – brought in roughly 2,100 employees. In its first full reporting month of March, the unit contributed €77 million to group revenue, largely from state shipbuilding programmes. That inaugural performance lends some credence to Barclays’ optimism.

The company’s forward pipeline remains enormous. Management expects the order backlog to swell to around €135 billion by the end of 2026, up from the current €73 billion. Politicians are providing tailwinds: the German government is planning a hefty increase in the military budget. Shareholders have already tasted some of this prosperity, approving a dividend hike to €11.50 per share at the virtual annual general meeting in May.

New business wins continue to trickle in, even as the stock languishes. The UK has ordered 72 RCH 155 howitzers in a billion-euro deal, with deliveries expected to begin around 2028. At its Neuss facility, Rheinmetall is starting serial production of the FV-014 kamikaze drone, with the Bundeswehr ordering initial systems worth €300 million. An additional venture with Deutsche Telekom aims to create a digital shield that protects critical infrastructure using mobile-phone sensor technology.

Yet competitive pressures may be building at home. Mercedes-Benz chief Ola Källenius recently signalled openness to expanding into the defence business. Daimler Truck already supplies military vehicles, and a full-blown entry by the automaker would intensify the squeeze on established players.

For now, Rheinmetall’s fate hinges on the charts. If the share price breaches the €1,118.00 low, technicians warn of further downside. The promised strong quarterly results must arrive quickly to provide technical relief before the bears tighten their grip.