Rheinmetall Cuts Its Automotive Ties and Lands a €5.7 Billion Romanian Prize — Yet the Share Price Refuses to Rally

Defence giant Rheinmetall sells civilian arm, secures €5.7B Romanian deal, but shares fall 40% off highs amid sector downturn and analyst split.

The Düsseldorf-based defence group is doing everything the market asked for: shedding its civilian automotive arm, locking in record international orders, and deepening its presence in Kassel. But the stock continues to drift lower, closing Friday at €1,190 — 25.69% below its year-end level and 40.35% off the 52-week high.

The contradiction is stark. Rheinmetall’s operational narrative has never been clearer. The sale of its Power Systems division to Munich-based AEQUITA, signed on Thursday, removes the last major vestige of the old dual strategy. Around 6,250 employees will move with the business, and the deal — valued at €350 million (approximately $406 million) — is expected to close in the fourth quarter of 2026. The buyer also commits to additional investments of $41 million at U.S. sites.

Only two days earlier, the company confirmed its largest international contract in recent memory: a €5.7 billion order package from Romania covering 298 Lynx infantry fighting vehicles in multiple variants, air defence systems, ammunition, and four naval vessels. Deliveries are scheduled between 2028 and 2030.

Bundeswehr adds to the pipeline

While the Romanian deal grabbed headlines, a quieter flow of domestic demand is reinforcing the order book. Germany’s armed forces have signalled interest in 35 additional Schakal wheeled armoured vehicles, a potential order worth around €650 million. Another 23 Büffel recovery vehicles are sought, with an estimated value of €360 million.

These are not marginal add-ons. They reflect sustained procurement planning, not a short-term burst. Rheinmetall’s Kassel site is set to expand from its current headcount to 3,000 employees by 2029, management has confirmed.

The combined effect is a total order backlog of €73 billion — a figure that gives the group multi-year visibility. For 2026, the company reaffirmed its revenue target of €14–14.5 billion, representing growth of up to 45% year-on-year. The ramp-up in production, however, is weighted toward the second half.

Analysts split on valuation

Those operational strengths have not insulated the stock from a sector-wide downturn. Defence names across Europe — Renk, Hensoldt, others — have been hit by rising hopes for a Ukraine ceasefire and growing concerns over how higher European defence spending will be financed.

Rheinmetall’s relative strength index stands at 39.6, indicating mild oversold conditions but not yet a clear reversal signal. The shares are trading just 8% above their May low.

Analysts remain divided. Citigroup’s Charles Armitage upgraded the stock to Buy but trimmed his price target to €1,408, citing a higher share count. He described the recent sector fears as overblown. Barclays keeps an Overweight rating with a €2,035 target, highlighting scale advantages in land systems and ammunition. Berenberg maintains Buy at €1,750. JPMorgan, however, cut its stance to Neutral with a €1,500 price objective.

ILA Berlin: a stage for the new Rheinmetall

Next week’s International Aerospace Exhibition in Berlin offers a chance to reset the narrative. Rheinmetall will present an 840-square-metre display featuring the MQ-28 Ghost Bat drone, the FV-014 loitering munition system, and updates on its F-35 centre-fuselage production line in Weeze — which has already completed the eighth section.

The ILA appearance is more than a trade show. It is the company’s first major public demonstration of how far the transformation from automotive supplier to pure defence player has progressed. Investors will be watching for signals that the story can finally regain traction in the market.

The sale of Power Systems removes a valuation discount that had long weighed on the stock. The Romanian order reinforces the international growth thesis. The Bundeswehr’s procurement plans add a steady domestic backbone. The question now is whether the market will begin to price these changes in — or wait for the production peaks that lie in the second half of 2026.