Rheinmetall’s €5bn Romanian Windfall Can’t Shake the 52-Week Low Shadow

Despite a €5B+ Romanian contract and record backlog, Rheinmetall shares hit a 52-week low. JPMorgan sees an attractive entry point as defence spending rises.

The disconnect between Rheinmetall’s order book and its share price has seldom been starker. On one hand, the Düsseldorf-based defence group is finalising a massive procurement package from Romania worth well over €5 billion, covering everything from infantry fighting vehicles to naval patrol ships. On the other, its stock is trading at 1,367 euros — barely a whisker above yesterday’s 52-week low of 1,340 euros.

Romania is moving ahead with 15 separate procurement programmes under the EU’s SAFE financing mechanism, with Rheinmetall acting as the prime contractor. The largest single chunk is the Lynx programme: up to 298 armoured infantry vehicles at a cost of roughly 3.3 billion euros, awarded by direct mandate. Two air-defence systems follow — Skynex batteries for almost 476 million euros and Skyranger systems for around 470 million euros. Additional line items include 35mm ammunition worth 450 million euros and the Millennium close-in protection system for 36 million euros. On the maritime side, Bucharest plans to acquire offshore patrol vessels for 836 million euros and diver support ships for 84 million euros. All contracts are expected to be formally awarded by 31 May.

Yet the market is having none of it. Since the start of the year, Rheinmetall shares have shed nearly 15 percent, and the stock now sits roughly 20 percent below its 200-day moving average. JPMorgan analyst David Perry, who reiterated an “Overweight” rating with a 2,130-euro price target on Wednesday, argues the sell-off has gone too far. The correction since October 2025, he contends, has created an attractively valued entry point. Investor fears around a Ukraine ceasefire, execution risks and the growing role of drones are legitimate, he says, but are being overweighted. Perry expects Germany’s defence budget to rise by around 21 percent year-on-year in 2027 — a powerful tailwind for the group.

The operational picture certainly supports that view. Rheinmetall grew revenues by 29 percent in 2025 to nearly €10 billion, and its order backlog stands at €63.8 billion. For 2026, management is guiding for revenue growth of 40 to 45 percent, targeting €14.0 to €14.5 billion. Remarkably, 91 percent of that target is already covered by existing contracts. The operating margin is expected to climb to around 19 percent in 2026.

But the expansion comes at a cost. The group is holding roughly €8 billion in critical inventory, a drag on working capital and free cash flow. At the Blohm+Voss yard in Hamburg, serial production of the Kraken K3 Scout unmanned surface vessel has begun, with an initial annual capacity of 200 units that can be scaled to 1,000. That kind of ramp-up ties up capital before the revenue streams fully materialise.

Two key dates loom in May. On 7 May, Rheinmetall reports first-quarter numbers, where analysts will scrutinise margin trends and order intake. On 12 May, the annual general meeting will vote on the dividend — set at €11.50 per share for 2025, with analysts pencilling in €15.40 for the current year.

Whether the Romanian SAFE contracts will act as the catalyst the stock needs remains an open question. If the formal award goes through by the end of May as planned, it would give order intake another measurable boost. For now, though, the market is looking past the record backlog and focusing on the risks — a gap that JPMorgan believes is precisely the opportunity.