Goldman Sachs Champions Rheinmetall with Bullish 40% Upside Forecast

Goldman Sachs adds Rheinmetall to its Conviction List with a €2,300 price target, citing a massive €63.8B backlog and a new Boeing drone partnership, despite a current struggle to break €1,600 resistance.

Market strategists at Goldman Sachs have placed Rheinmetall on their prestigious "European Conviction List," signaling strong confidence in the German defense contractor's trajectory. The firm has set a price target of €2,300 for the shares, implying a potential gain of over 40% from recent levels around €1,570. Despite this significant vote of confidence, the stock's price reaction in the immediate aftermath has been muted.

The share price has been consolidating, even amid heightened geopolitical tensions surrounding the Iran conflict and threats to block the Strait of Hormuz. Recent attempts to push past the €1,600 resistance level have proven unsuccessful. While the broader DAX index faced pressure, Rheinmetall has, for now, been unable to capitalize on its perceived status as a primary beneficiary of rising European defense budgets.

Robust Fundamentals Underpin Analyst Confidence

The optimism from Goldman is grounded in Rheinmetall's solid financial and operational metrics. The company's order backlog stood at approximately €63.8 billion at the end of 2025, a level of visibility that few other European defense firms can match. Its operating margin reached 18.5% in 2025, with management guiding toward a further improvement to around 19% for 2026. Revenue targets are set between €14 billion and €14.5 billion.

A recent strategic expansion into advanced technology bolsters this outlook. Rheinmetall just finalized a partnership with Boeing to co-develop the "MQ-28 Ghost Bat" combat drone for the German armed forces. Serving as the systems manager for integrating the drone into existing command and weapon platforms, the company stands to generate revenue in the high hundreds of millions of euros, with the earliest contributions expected from 2029 onward.

Technical Analysis: €1,600 as the Key Hurdle

From a chart perspective, the setup remains positive provided the share price maintains support above the €1,500 level. A decisive and sustained breakout above the €1,600 mark is viewed as the technical catalyst that could propel the equity toward its all-time highs. Whether Goldman Sachs's ambitious price objective is realized will also depend on the pace at which NATO member states formalize and execute their accelerated procurement plans. Investors are anticipating more concrete details on these spending initiatives in the coming weeks.