Rheinmetall's €80.5 Billion Order Book Has a 2028 Problem, and the Market Just Noticed

Rheinmetall's €80.5B backlog may not cover 2028 revenue targets, analysts say, as shares drop 2.8% on sell rating and €1,050 price target.

The arithmetic behind Rheinmetall's headline-grabbing order backlog is starting to draw scrutiny, and investors are voting with their feet. Shares in the German defense contractor slid to the bottom of the DAX on Wednesday, shedding 2.8 percent to €1,177.80, after mwb research published a blunt assessment of what the company's €80.5 billion in contracted work actually means for future revenue.

The analysis house's verdict: not enough. According to mwb research, only around €2.4 billion of that backlog is realizable as revenue in 2028 — a figure that sits in stark contrast to the firm's own 2028 revenue forecast of €22.63 billion and the market consensus of €25.4 billion. To bridge that gap, Rheinmetall would need to secure roughly €65 billion in additional orders by the end of the decade. The analysts reaffirmed their "Sell" rating with a €1,050 price target, arguing that current market expectations are simply too ambitious.

Where the backlog runs thin

The order book, reported at the half-year mark at the end of June, comfortably covers consensus revenue estimates through 2027. The problem begins after that. mwb research points to specific pressure points — the Steyr business and the F126 frigate project — where delays would leave little room for maneuver. The firm's projections for the coming years tell the story: €13.81 billion revenue and €2.62 billion EBIT in 2026, rising to €18.78 billion and €3.75 billion respectively in 2027, before reaching €22.63 billion and €4.52 billion in 2028.

The warning landed on a stock that had already been losing altitude. Wednesday's decline — which came despite a firmer opening, with the shares turning negative as the session wore on — extends a broader pullback that has left Rheinmetall trading roughly 41 percent below its 52-week high of €2,007.00, reached in early October. The stock is down 24 percent since the start of the year, though it still shows a 19 percent gain over the past month, reflecting a solid recovery run that made the shares vulnerable to profit-taking.

A sector outlier on a nervous day

The sell-off stood out sharply against the broader market. The DAX slipped just 0.1 percent to around 26,100 points on Wednesday, while Rheinmetall's European and American peers — BAE Systems, Thales, General Dynamics, Lockheed Martin and Northrop Grumman — traded in a comparatively narrow range without any moves of similar magnitude. That divergence underscored how company-specific the pressure on Rheinmetall has become.

The analyst caution also arrives in a market environment that is growing increasingly jittery. Rising US Treasury yields are weighing on growth and technology stocks globally, while the yield on ten-year German Bunds has climbed to 3.26 percent — its highest level since the eurozone crisis. That dynamic is sapping risk appetite across the board and hitting cyclically sensitive names like Rheinmetall with particular force.

The bull case hasn't gone away

For all the near-term skepticism, the political tailwinds behind European defense spending remain formidable. NATO members have committed to a target of 5 percent of GDP for defense outlays by 2035, with 3.5 percentage points earmarked for core defense. Germany alone plans to spend €108.2 billion on defense in 2026, rising to €152 billion by 2029. Globally, military spending has reached $2.9 trillion — the eleventh consecutive record year.

The open question is whether those budget commitments translate into order flow fast enough to close the 2028 gap. mwb research doubts the pace of contract awards can keep up with market expectations. The stock's current level, roughly 7.6 percent above its 50-day moving average of €1,097.07, suggests the recent recovery hasn't been fully unwound — but the path from here likely depends on whether Rheinmetall can land new large-scale contracts in the coming quarters to fill the hole the analysts have identified.