Rheinmetall's Record Order Book Meets a Market Fixated on Execution

Rheinmetall shares fell 1.5% to EUR 971 as MWB Research flags delivery risks, while Berenberg keeps its Buy rating and EUR 1,600 target.

Rheinmetall closed Monday's session at EUR 971.00, down 1.5%, extending a year-to-date decline that now stands at 37%. The Düsseldorf-based defense contractor finds itself in an unusual position: its pipeline of new business has rarely looked stronger, yet investors are increasingly preoccupied with whether the company can actually deliver on it.

That tension sits at the heart of the current debate. MWB Research expects Rheinmetall's order backlog to surpass the EUR 100 billion mark by year-end, a milestone that underscores the sheer scale of demand flowing into European defense. The analytical house, however, flags the conversion of those orders into reported revenue as the real test ahead, pointing to potential delivery delays and operational bottlenecks that could hamper on-time manufacturing. In its assessment, market expectations for the 2028 fiscal year look overly ambitious. For traders, the question has shifted from how many contracts Rheinmetall can win to how smoothly it can work through the commitments it already holds.

The stock's retreat has coincided with a broader cooling of sentiment across the European defense sector. According to media reports, speculation about possible diplomatic negotiations in the Ukraine war triggered noticeable profit-taking among sector names on Thursday, with Rheinmetall coming under particular pressure. After months of gains across the defense space, the shift in the news cycle made investors nervous, and many opted to lock in profits. Rheinmetall declined to comment on the market-wide moves.

Not everyone has turned cautious. Berenberg reaffirmed its "Buy" rating on Friday and kept its price target at EUR 1,600. Analyst Chris Armstrong cited sustained fiscal policy momentum and growing export demand as the pillars of his thesis, naming Rheinmetall alongside Renk and OHB as companies positioned to benefit most from rising government defense budgets.

On the operational front, Rheinmetall continues to stack up wins. In mid-September, the group secured a contract from an international customer for a low five-digit quantity of 155mm artillery ammunition, a deal valued in the low triple-digit millions of euros with delivery scheduled for 2027. The company also reported progress on the technology side. At the NATO REPMUS26 exercise in Portugal, Rheinmetall tested networked unmanned systems designed to protect maritime infrastructure, including a containerized solution intended as a deployable asset for the German Navy.

Its UK subsidiary marked another milestone at the Telford site, where Rheinmetall UK commissioned a new vibration testing facility now supporting development of the Challenger 3 main battle tank. And at the Hartha plant in Saxony, the group's Pierburg Pump Technology subsidiary received roughly EUR 1.5 million in funding from the Sächsische Aufbaubank for the NanoLink project, which focuses on industrial production of NanoLam capacitors. Rheinmetall plans total investments exceeding EUR 4.4 million at the site.

Whether that mix of contract wins and development programs can reignite the shares depends largely on how quickly supply chains and production capacity fall into line over the coming quarters.