Rheinmetall's Lithium Side-Bet and Spanish Shell Line Sit Behind a 5.4% Sector Bounce

Rheinmetall shares climbed 5.4% to EUR 1,090.20 on Friday, riding a broad recovery across European defence names rather than any single company-specific catalyst. The advance pushed the stock back above the EUR 1,020 target that Berenberg assigned it just over a week ago, when the private bank cut its rating from "Buy" to "Hold."

The sector-wide strength drew on two geopolitical threads. Mounting doubts over future US military support for Ukraine, together with a Brussels meeting between European leaders and Volodymyr Zelenskyy, refocused attention on Europe's push for greater security autonomy. Morgan Stanley added to the momentum by suggesting that additional defence orders could land toward the end of the year. Market participants read the discussions as a signal that European buyers will have to accelerate procurement programmes over the medium term.

A Strategic Stake in Battery Materials

Beyond the traditional arms business, Rheinmetall's strategic holdings moved into the spotlight. According to media reports citing Bloomberg, the Düsseldorf group is participating in a capital increase at raw materials firm Rock Tech Lithium, taking the role of strategic co-investor in the construction of a lithium converter plant in Guben, Brandenburg. Rheinmetall has not yet officially confirmed the transaction.

The move reflects a push to bind supply chains and strategic industrial projects more tightly to the company's own network. It follows earlier technology tie-ups, including software for controlling autonomous systems in the Boxer CRV alongside partner Breaker, and satellite reconnaissance through the joint venture Rheinmetall ICEYE Space Solutions.

Spanish Plant and a Doubled Credit Line

On the core business side, capacity is expanding at pace. Spanish subsidiary Rheinmetall Expal Munitions commissioned a new facility for medium-calibre components at its Albacete site under the "Firepower" project, an investment of roughly EUR 20 million. Output is designed for an annual volume of about three million components, split into around 1.2 million shells and 1.8 million cartridge cases, while headcount at the site is set to rise by about a third.

Funding has kept step with the operational build-out. Rheinmetall renewed its syndicated credit facility ahead of schedule in early October, doubling it from EUR 750 million to EUR 1.5 billion to leave extra room for expansion.

Australia Order and Space Access

Internationally, Rheinmetall Defence Australia agreed to supply the containerised AERIE air-defence system for countering unmanned aerial vehicles, and demonstrated networked vehicle systems with partners on the Boxer CRV wheeled armoured vehicle. A Bundeswehr joint venture also provided exclusive access to space-based reconnaissance satellites under the SPOCK-1 programme.

Berenberg's downgrade, which also cut the price target from EUR 1,600 to EUR 1,020, was grounded in uncertainty over revenue development after 2030 — a caution that sits awkwardly against management's continued industrial expansion, with demand for ammunition and defence equipment still running high amid the war in Eastern Europe.

Despite Friday's jump, the stock is down 30% since the start of the year. Whether it can extend the recent recovery will hinge largely on order intake and upcoming performance data. Concrete insight into the current quarter arrives on 5 November 2026, when Rheinmetall publishes its interim report for the third quarter.