Rheinmetall Stages Comeback on Citi Upgrade and €2,000 km Missile Ambitions

Rheinmetall gains 4.5% after Citi upgrade and €73B backlog; missile JV targets 2,000 km range, but stock remains below moving averages.

Rheinmetall’s stock has clawed back from the precipice of its 52-week low, propelled by a double dose of bullish news: a Citigroup upgrade and a joint venture to mass-produce long-range strike missiles. The shares jumped more than 4.5% on Monday, closing at €1,175.20, as investors reassessed a sell-off that had wiped nearly 45% off the stock from its all-time high of €1,995.

Citi Calls the Market’s Bluff

Citigroup analyst Charles Armitage lifted Rheinmetall from “Neutral” to “Buy”, arguing that the recent rout had priced in overly dire assumptions. While trimming the price target to €1,408 to reflect a higher share count, Armitage sees substantial upside from current levels. He contends the market is discounting an unrealistic scenario in which defence profits begin to shrink after the current cycle ends around 2030, even though consensus estimates project roughly 35% annual earnings growth over the next four years.

Armitage highlighted that structural threats from Russia will persist regardless of any ceasefire in Ukraine, and that European governments such as Germany and Sweden still have room to expand borrowing for defence spending. That structural tailwind, he believes, makes the stock’s 26% year-to-date decline — which pushed it to a 52-week trough of €1,118 last week — an overreaction.

RUTA Block 3: From Drawing Board to Production Line

Alongside the rating change, Rheinmetall and Dutch firm Destinus unveiled fresh details on their joint venture “Rheinmetall Destinus Strike Systems”. Rheinmetall holds 51% and Destinus 49% in the vehicle behind the “RUTA Block 3” precision-strike system. The missile, powered by a T220 turbojet engine and carrying a 250 kg warhead, is designed to hit targets up to 2,000 km away.

Production will be split across multiple sites: design work in the Netherlands, components and testing in Ukraine, and final assembly at Rheinmetall’s plant in Unterlüß, Germany. First deliveries are slated for the end of 2026. The partners estimate the annual addressable market in the billions of euros, giving the stock a tangible growth catalyst beyond the current order book.

Fundamentals Back the Bull Case

The operational picture adds weight to Armitage’s thesis. Rheinmetall grew first-quarter revenue by 8% to €1.9 billion, while operating profit climbed 17% to €224 million. The order backlog hit a record €73 billion — now including the newly integrated naval business. Management reaffirmed its full-year guidance and expects growth to accelerate from the second quarter as pre-produced military trucks are finally delivered to customers.

Technical Hurdles Remain

Despite Monday’s rally, the stock still trades about 41% below its 52-week high and remains nearly 29% under its 200-day moving average — a sign that a true trend reversal is not yet confirmed. The relative strength index has jumped to 93, flagging short-term overbought conditions. The immediate test is whether Rheinmetall can hold above the €1,100 support level, which would break the downward channel of recent weeks.

Sector peers also caught a bid. Renk added 1.8%, Saab — lifted to “Neutral” by Citi in a separate note — rose 2.0%, while Hensoldt and TKMS posted gains of less than 1%. For Rheinmetall, the next major fundamental catalyst comes on May 21, when the company presents to investors in New York, followed by the detailed half-year report on August 6. Until then, geopolitical headlines and the production ramp-up of the RUTA missile will keep the story in play.