Rheinmetall's Order Book Faces a 2028 Reckoning Even as New Contracts Pile Up

Rheinmetall's order backlog may not cover 2028 forecasts, triggering a sell rating and a 2.8% stock drop, despite new contracts.

The arithmetic of Rheinmetall's future is getting harder to ignore. While the Düsseldorf-based defense group keeps adding headline-grabbing contracts to its pipeline, a fresh sell-side warning has put a spotlight on a nagging question: can the order intake keep pace with the market's ambitious revenue forecasts?

The latest bout of weakness came on Wednesday, when the stock slid to the bottom of the DAX. The trigger was a "Sell" recommendation from mwb research, which argues that the company's backlog leaves a gaping hole for 2028. The shares closed the session at €1,177.80, down 2.8 percent, after briefly opening in positive territory. The broader index, by contrast, slipped just 0.1 percent to roughly 26,100 points.

The 2028 Gap That Has Analysts Worried

mwb research's concern centers on the order book that Rheinmetall reported at the end of June: €80.5 billion, supplemented by a nomination value of €16.2 billion. The analysts calculate that only about €2.4 billion of that backlog can realistically convert into 2028 revenue. That compares with their own 2028 forecast of €22.63 billion in sales and a market consensus of €25.4 billion.

To bridge that chasm, the company would need to secure roughly €65 billion in additional orders by 2028 — a pace of intake that mwb research considers unlikely. The house has set a price target of €1,050 and projects revenue of €13.81 billion with EBIT of €2.62 billion for 2026, followed by €18.78 billion in sales and €3.75 billion in EBIT for 2027.

New Business Keeps Flowing

The skeptical note lands at a curious moment for the company's commercial momentum. Rheinmetall recently confirmed its collaboration with Lockheed Martin on ATACMS missile production, though it cautioned that the production ramp-up will take time before meaningful revenue materializes. Reuters separately reported that the group's share of a KNDS contract amounts to roughly €12.4 billion out of a total volume of about €25 billion, further entrenching its position in European land systems.

These projects slot into an already formidable pipeline spanning ammunition, missile technology, and armored vehicles. The company's order book stood at €80.5 billion at mid-year, and the new agreements extend a streak of contract wins that has made Rheinmetall one of Europe's most visible beneficiaries of the defense spending surge.

A Forecast Cut and a Stock Under Pressure

The new business has not shielded the company from a guidance revision. After losing the F126 frigate program, Rheinmetall trimmed its 2026 revenue outlook to a range of €13.7 billion to €14.2 billion, down from a prior ceiling of €14.5 billion. The negative impact from Naval Systems is estimated at up to €300 million. Management nevertheless reaffirmed organic growth of 28 to 31 percent for 2026 and an operating margin of roughly 19 percent.

The share price tells a more turbulent story. At €1,179.20 in recent trading, the stock has fallen 24 percent since the start of the year. It sits 41 percent below its 52-week high of €2,007.00, reached in early October, though it remains 31 percent above the June low of €902.50. On a one-month view, the equity has clawed back 19 percent, reflecting a solid recovery rally that Wednesday's setback partially trimmed.

The Bull Case: Billions in Budget Commitments

Against the mwb research caution stands the political backdrop that has fueled the broader defense rally. NATO members have agreed on a target of 5 percent of GDP for defense spending by 2035, with 3.5 percentage points earmarked for core capabilities. Germany alone plans €108.2 billion in defense outlays for 2026, rising to €152 billion by 2029. Global military expenditure has reached $2.9 trillion — an eleventh consecutive record.

Whether those budget pledges translate into Rheinmetall contracts at the pace the market expects remains the pivotal question. The company's international peers — BAE Systems, Thales, General Dynamics, Lockheed Martin, and Northrop Grumman — traded mixed on Wednesday without the pronounced swings seen in Rheinmetall's shares.

For now, the tension is plain: a short-term share price under pressure against a long-term pipeline that keeps expanding. The resolution likely hinges on how quickly the newest projects convert into booked revenue — and whether the order intake can silence the skeptics before 2028 arrives.