Hensoldt’s Record Order Book Clashes with Sell Rating as Valuation Hits Stretch

Defence electronics firm Hensoldt rallies past €87, yet sell-side warns of overvaluation with P/E double Rheinmetall's, despite record orders and long-term growth targets.

Hensoldt shares have surged more than 20% in the past week, breaching the 200-day moving average on Thursday to close at €87.76 and pushing as high as €89.18 on Friday. The defence electronics specialist is enjoying a clear technical breakout, but behind the rally, a growing chorus of analysts is questioning whether the stock has flown too high too fast.

mwb research has slapped a “Sell” rating on Hensoldt, with a fair value estimate of just €58 to €62 — a far cry from the current price. The analysts argue that the recent outperformance relative to the broader defence sector lacks fundamental justification. Hensoldt faces the same cyclical risks as its peers, they note, yet the forward price-to-earnings ratio for 2027 is pegged at roughly 40. That is double the multiple assigned to sector heavyweight Rheinmetall. The low share of software revenue — still stuck in the single digits — also weighs against any argument for a tech-premium valuation.

The operational picture tells a different story. Hensoldt booked a record order backlog of about €9.8 billion in the first quarter of 2026, providing multi-year visibility. Incoming orders doubled to €1.5 billion, giving a book-to-bill ratio of three. Revenue rose nearly 26% year-on-year to €496 million, while the operating loss per share narrowed from €0.26 to €0.16. Management is guiding for full-year 2026 revenue of around €2.75 billion, with a longer-term target of €6 billion by 2030. Analysts currently expect earnings per share of €1.78 for this year.

On the strategic front, Hensoldt is part of a consortium — alongside OHB, Helsing and Norway’s Kongsberg — that is bidding for the Bundeswehr’s “Spock 2” contract to build an AI-driven, satellite-based surveillance and targeting system. That comes on top of the company’s existing role as a key supplier of radar systems, including the Mk1 radar used in new combat platforms, which Airbus Defence and Space says could cut costs by more than 40%.

At the annual general meeting on Thursday, shareholders approved a dividend of €0.55 per share for fiscal 2025, with analysts already pencilling in an increase to €0.69 for 2026. The German state has held a 25.1% stake since 2021, underscoring Hensoldt’s strategic importance to national defence. Net debt stood at €728 million after the recent acquisition of ESG.

Despite the strong operating momentum, the valuation leaves little room for error. The average analyst price target sits around €91 to €93, implying only modest upside from current levels — and well below the 52-week high of roughly €115. The next major test comes on 31 July 2026, when Hensoldt reports second-quarter results. For now, the market is betting that the company can deliver on its ambitious medium-term targets, but the sell-side warnings are becoming harder to ignore.