Rheinmetall’s Stock Stuck Near Lows as €9 Billion Order Cut Overshadows Record Pipeline

Rheinmetall shares slip 2.13% to €1,122, down 30% YTD amid supply-chain snags and missed Q1 revenue, but massive €73B order book and long-term pipeline offer upside.

Rheinmetall shares are languishing just above a 52-week trough, caught between a torrent of new business and a series of execution stumbles that have eroded investor confidence. The stock slipped 2.13% on Friday to €1,122.40, leaving the defence group down roughly 30% since the start of the year and perilously close to the €1,118.00 floor.

Analyst sentiment reflects the widening gap between near-term drags and long-term promise. Berenberg slashed its price target from €2,100 to €1,750 in a May 15 note, citing a weaker sector valuation environment and reduced assumptions for major projects. The most painful adjustment came on the Boxer-Arminius programme, where Berenberg trimmed its expectation from €32 billion to €23 billion — a €9 billion cut that underscores how decisively the market has repriced growth hopes. The bank maintained its buy recommendation, but the damage to the stock’s valuation assumption is already done.

Operational friction is compounding the headache. In the Weapon & Ammunition division, powder deliveries worth roughly €100 million have been held up by inspection controls. A further €200 million in military truck orders faces logistical blocks. These supply-chain snags are hardly existential for a company sitting on an order book of around €73 billion, but they sap the short-term revenue momentum that investors had priced in. AlphaValue flagged the same powder problem, noting that acceptance checks had temporarily halted sales.

First-quarter results offered little relief. Revenue climbed to €1.94 billion, yet analysts had expected a higher figure given the size of the backlog. The operating margin improved to 11.6%, but the market’s focus was firmly on the missed top-line target. Administrative bottlenecks and logistics delays continue to weigh on deliveries.

Not all the news is bleak. The UK placed an order for 72 RCH 155 howitzers, a deal valued at around £1 billion, with deliveries due to start in 2028. In Neuss, serial production of the FV-014 kamikaze drone has begun under a framework agreement with the German armed forces worth billions; the first call-off is approximately €300 million. Rheinmetall still expects 2026 revenue of €14.0–€14.5 billion and an operating margin of roughly 19%.

The forward pipeline is immense. Berenberg believes the group could secure up to €80 billion in defence orders by year-end. Framework agreements already cover nearly three-quarters of anticipated 2027 revenue. Yet that very visibility cuts both ways: when expectations run high, every hiccup is magnified.

Diversification is accelerating as CEO Armin Papperger pushes into new domains. The Naval Vessels Lürssen integration is now fully reflected in the balance sheet, and a joint venture for cruise missiles and ballistic rocket artillery is in the works. But expansion brings complexity. JPMorgan responded by downgrading the stock to neutral, even as Warburg Research upgraded from hold to buy, setting a price target of €1,550. The Deutsche Bank and UBS targets remain higher at €2,100 and €2,200 respectively.

For now, the market is demanding proof of execution. The next few quarters will show whether Rheinmetall can resolve its delivery bottlenecks and convert its record backlog into accelerating cash flows. Until then, the stock is caught in a tug-of-war between a transformative order cycle and the gritty reality of getting metal out the door.