Rheinmetall’s ILA Showcase: Skyranger and Ghost Bat in the Spotlight as Morgan Stanley Cools on Defence

Rheinmetall unveils Skyranger 30 and loitering munitions at Berlin Air Show but faces Morgan Stanley downgrade and a 25% share price drop. €73B order book offers visibility despite execution concerns.

The Berlin Air Show was meant to be a coming-out party for the new Rheinmetall. Instead, the Düsseldorf-based group finds itself fighting for altitude on two fronts: a Morgan Stanley downgrade that hit just as the doors opened and a stock price that has shed nearly a quarter of its value since January. The contrast between the hardware on display and the reception on the trading floor could hardly be starker.

At the centre of the company’s ILA 2026 presentation is the Skyranger 30, a mobile air-defence system mounted on a Boxer platform that integrates MBDA’s DefendAir missiles. Designed to counter swarms of drones and cruise missiles, the system gains extra relevance through Europe’s Sky Shield initiative. Alongside it, Rheinmetall is rolling out the FV-014 loitering munition system – a cross between a drone and artillery – for which it already holds a framework agreement with the Bundeswehr signed in April 2026, valued at several billion euros. The LUNA NG reconnaissance drone, introduced into German service under the name HUSAR, rounds out the aerial portfolio.

The show also marks the group’s debut as a pure-play defence contractor. On June 3, Rheinmetall completed the sale of its automotive division to the industrial group AEQUITA for around €350 million. No longer weighed down by a cyclical auto business, management is now free to chase high-margin military contracts. The ambition extends well beyond tanks and ammunition: partnerships with Boeing on the autonomous MQ-28 Ghost Bat combat aircraft – where Rheinmetall acts as system manager in Germany – and the Rheinmetall ICEYE Space Solutions joint venture for satellite-based reconnaissance underline the push into integrated land, air and space systems.

Yet the share price tells a different story. The stock was trading between €1,203 and €1,211 early this week, a modest 0.52% gain on the day but roughly 25% below where it started 2026. The 200-day moving average – cited at roughly €1,611 in one estimate and €1,617 in another – underscores the depth of the slide. At €1,988, the 52-week high from September 2025 is now almost €800 away.

Morgan Stanley’s decision to downgrade the stock to “equal-weight” added to the headwinds. The US bank’s move, which also pulled down peers such as Hensoldt and Renk, reflects a broader shift in sentiment: the institutional euphoria that lifted European defence stocks over the past two years is giving way to a more sober assessment of execution risks. With a current price-to-earnings multiple of around 32, Rheinmetall’s valuation demands continued confidence in the growth story – confidence that the downgrade suggests is wavering.

What could restore that confidence is the sheer size of the order book. The company’s backlog has swelled to roughly €73 billion, a figure that provides rare visibility in an industry subject to political cycles. The critical question, however, is how quickly that pipeline can be converted into revenue and margin. On the ILA exhibition floor – which runs until June 14 – management is working to demonstrate that the transformation from auto supplier to defence systems house justifies the premium. Morgan Stanley, for now, is keeping its powder dry.