Rheinmetall's Hungarian Gearbox Pact Underscores Record Orders, but Artillery Doubts Keep the Stock Grounded

Rheinmetall signs €270m transmission deal for Lynx vehicles, but shares slide 39% YTD; BofA cuts price target to €1,300 citing shifting defense budgets from artillery to drones.

Rheinmetall just inked another multi-million-euro deal, this time a €270 million expansion of its existing framework agreement with the Renk Group for transmissions used in Hungary’s Lynx infantry fighting vehicles. The contract covers HSWL 256C gearboxes and matching side drives—the latest entry in a string of announcements that, on the surface, paint a picture of relentless demand.

Yet the Düsseldorf-based defence contractor’s share price tells a very different story. At €970.10, the stock eked out a 0.53% gain on Wednesday, but it remains down 39.43% since the start of the year and a staggering 51.37% below its September 2025 all-time high of €1,995. The disconnect between operational momentum and market sentiment is becoming increasingly difficult to ignore.

The Renk deal follows hot on the heels of two other high-profile wins. On July 10, Rheinmetall announced the first delivery of decoy launchers to Kuwait, to be installed on eight navy vessels. Three days later, its UK electronics subsidiary secured a lead role in the British Army’s training programme, a contract worth nearly €1 billion over 15 years. Meanwhile, the order backlog swelled to €73 billion as of March 31, up roughly 31% from €56 billion a year earlier, and management reaffirmed its 2026 guidance for revenue of €14–14.5 billion at an operating margin of about 19%.

That guidance implies 40–45% year-on-year sales growth. But it is precisely the credibility of that trajectory—especially for the weapons and ammunition division—that the Bank of America has challenged head-on.

BofA analyst Benjamin Heelan slashed his price target for Rheinmetall from €1,770 to €1,300 on Wednesday, while maintaining a buy rating. His reasoning: the company’s 2030 ambition for its munitions business to generate €14–16 billion in revenue at a 30% margin is "hardly achievable." Heelan now pencils in roughly €10 billion in sales and a 24% margin, translating into an operating profit of €2.4 billion rather than the €4–5 billion the group is targeting.

The crux of his scepticism is a shifting warfare paradigm. Conflicts in Ukraine and the Middle East are redirecting defence budgets away from conventional artillery and toward drones, precision munitions and air defence systems. Heelan argues that Rheinmetall’s plan to keep munitions as its largest division through the end of the decade misjudges how NATO capitals are now prioritising spending.

That view is not unique to BofA. MWB Research analyst Rieck recently stripped his buy rating on the stock, citing similar concerns about changing alliance priorities. JPMorgan’s David H Perry had earlier warned of rapid technological upheaval in defence. The mounting chorus of caution has amplified the pressure on a stock that was already reeling from another setback.

In late June, the Bundeswehr pulled the plug on the F126 frigate project—a flagship programme that had justified Rheinmetall’s acquisition of shipbuilder Naval Vessels Lürssen. Without that order, the navy division’s medium-term forecasts look shakier, adding another layer of doubt to the group’s broader growth narrative.

Technical indicators reflect the malaise. The 50-day moving average sits at €1,135.24 and the 200-day average at €1,502.90, meaning the stock trades roughly 35% below its long-term trend. Over the past twelve months, the share price has fallen nearly 47%. Even so, the reduced BofA target of €1,300 still implies upside of about a third from current levels.

Berenberg, by contrast, cut its price target to €1,600 but kept a buy rating, while the consensus among analysts remains well above today’s valuation. For now, the fundamental strength of Rheinmetall’s order book—bolstered by deals in Hungary, Kuwait and Britain—faces a stern test from a market re-evaluating exactly what kind of warfare the future holds.