Rheinmetall's Show of Strength in Berlin and Bucharest Does Little for a Stock Down 26% in 2025

Rheinmetall secures its largest international order at €5.7bn from Romania, plans major presence at ILA Berlin, but shares remain near 52-week lows amid Q1 revenue miss and execution worries.

The defence contractor has racked up its largest-ever international single order, worth €5.7bn from Romania, and is set to dominate the ILA Berlin air show next week with a sprawling 840-square-metre exhibition stand. But the shares are trading barely 8% above their 52-week low, leaving a stark gap between operational momentum and investor sentiment.

Romania’s procurement package covers 298 Lynx infantry fighting vehicles, Skyranger air defence systems, medium-calibre ammunition and — for the first time for Rheinmetall — four naval vessels, a win for the newly formed Naval Systems division. Financing comes via EU loans under the Security Action for Europe (SAFE) programme, with deliveries scheduled between 2028 and 2030. The company also plans substantial technology transfer and the creation of more than 1,000 local jobs, a factor that increasingly weighs with governments seeking to build domestic industrial capacity alongside hardware purchases.

At the ILA show in Schönefeld from 10 to 14 June, Rheinmetall will present itself as a full-spectrum defence house. The MQ-28 Ghost Bat, an unmanned combat aircraft for which Rheinmetall is set to act as prime contractor for a potential German procurement in 2029, will be a centrepiece. Another highlight is the Rheinmetall ICEYE Space Solutions joint venture, which recently secured a billion-euro contract with the Bundeswehr for space-based reconnaissance via SAR satellites. Also on display are the FV-014 loitering munition with a range of up to 100 km, the Skyranger 30 on the Boxer vehicle, the Caracal airborne platform, and a model of the F-35 Lightning II centre fuselage, 400 of which Rheinmetall produces in Weeze under a Northrop Grumman contract.

Yet the stock has been unimpressed by any of this. After closing Wednesday at €1,190.20, the shares have fallen 25.68% since the start of the year and are 40.34% below the 12-month high of €1,995. The annualised 30-day volatility stands at 53.4%, while the relative strength index sits at 39.5–39.6 — technically oversold territory but not a convincing buy signal. The distance to the 200-day moving average is 26.8%, underscoring a broken near-term trend.

The disconnect stems partly from a first-quarter revenue miss. Rheinmetall booked €1.94bn in sales against analyst expectations of around €2.3bn, a shortfall management attributed to deliveries shifted into the second quarter. The full-year guidance of €14bn to €14.5bn remains intact, but the market now wants to see execution — margins, cash conversion and punctual deliveries — rather than a record order backlog that already stands at €73bn.

Analysts remain broadly constructive. Citi recently upgraded the stock to Buy from Neutral, citing the price pullback as an opportunity, while UBS analyst Sven Weier kept his Buy rating but slashed his price target from €2,200 to €1,600, pointing to margin concerns and the weak cash-flow conversion after the Q1 disappointment. The consensus target is €1,889, with 18 Buy recommendations and zero Sells.

Operationally, Rheinmetall is undertaking a fundamental restructuring: it is exiting automotive supply entirely and concentrating on four divisions — Vehicle Systems, Weapon and Ammunition, Air Defence and Naval Systems. Separately, a $41m investment initiative is under way to modernise production facilities in Michigan, Ohio and Maine, aimed at shortening lead times for US programmes such as XM30 and CTT.

The ILA show therefore becomes more than a product showcase. It is a test of whether new procurement details or visible order momentum can close the gap between a robust outsourcing narrative and a stock that has shed a quarter of its value in 2025. Without such catalysts, the shares remain vulnerable to further valuation adjustment despite the billion-euro headlines.