Rheinmetall’s Order Book Swells, Yet the Share Price Stays Bent Under the F126 Shadow

Rheinmetall stock falls 37% YTD as investors focus on F126 frigate cancellation, overshadowing €1bn UK deal, Ukraine shells, and other wins.

The Düsseldorf-based defence contractor Rheinmetall has been piling on new business at a pace that would normally send a stock soaring. A €1bn British army training digitisation contract with Raytheon, a space-surveillance partnership in the Arctic, co-production plans for ATACMS missiles with Lockheed Martin, and the first batch of 155mm shells rolling out of its new Unterlüß plant for Ukraine – all landed within a fortnight. Yet the shares finished last Friday at €978, up a modest 1.85% on the day, and remain 37% below where they started the year.

Investors are not ignoring the contracts, but they are fixated on something else: the loss of the F126 frigate programme. Early in July, Rheinmetall disclosed that the cancellation of the German navy order could shave up to €300m off 2026 revenue if no compensation is found. That single blow has overhung every subsequent positive headline, leaving the stock trading roughly 51% below its 52-week high of €1,995 reached in September 2025.

The British deal – a 15-year programme called Omnia-Training, led by Raytheon UK – marks a strategic push by chief executive Armin Papperger to reduce reliance on the domestic market. Rheinmetall’s share of the consortium is “knapp einer Milliarde Euro”, or just shy of €1bn. The contract follows a string of international wins that also includes a memorandum of understanding with Norway’s Space Norway to fuse C-band SAR satellites with Rheinmetall ICEYE’s X-band technology for maritime surveillance over the Arctic and North Atlantic. Meanwhile, the co-production line for ATACMS short-range missiles at Unterlüß is expected to strengthen European supply capabilities from 2026.

Operationally, the company insists its momentum holds. The first delivery of RH1412 155mm shells from the new Niedersachsen plant – a low five-figure quantity – left for Ukraine in mid-July, with the full order due by the end of 2026. On the digitalisation front, Rheinmetall MAN Military Vehicles has taken overall responsibility for the Bundeswehr’s InterRoC VII research project, which aims to develop highly automated, multi-manufacturer military convoys. Even the civil side is active: the MIRA subsidiary and Rheinbahn began a multi-week test of teleoperated shuttles at Düsseldorf airport.

But the market is looking past these milestones to the half-year numbers due on 6 August. Analysts remain broadly bullish despite the share price slide. Bank of America’s Benjamin Heelan slashed his price target from €1,770 to €1,300 last week but kept a “Buy” rating, arguing that modern warfare is shifting from conventional artillery toward drones and precision weapons – a shift Rheinmetall is addressing through its Lockheed partnership, even if ammunition remains its largest division until 2030. Jefferies reiterated a €1,300 target on 10 July; Bernstein stood by its “Outperform” and €1,900 target two days earlier; Berenberg and UBS both kept “Buy” ratings with €1,600 targets.

All those projections sit well above the current share price, which is pushing into oversold territory – the relative strength index stands at 37.5. Yet technical signals alone rarely reverse a trend, and the F126 overhang is not going to disappear until the 6 August report provides a clearer picture of whether the new international orders can plug the €300m hole. The company has reaffirmed its second-quarter revenue growth target of over 60% in the same ad-hoc announcement that warned of the frigate cancellation – a sign that management believes the operational engine is still firing. Whether the stock can follow suit depends on how convincingly that engine drowns out the noise from Kiel.