FRANKFURT, May 8, 2026, 11:10 CEST
Rheinmetall shares fell below 1,300 euros on Friday to their lowest level since April 2025 after JPMorgan cut its rating on the German defence group, adding fresh pressure a day after the stock closed as the weakest performer in the DAX. The shares extended Thursday’s losses by about 5%, while Reuters reported Rheinmetall was down 5% after the downgrade.
The drop matters because it hits one of Europe’s best-known defence trades at a point when investors are asking whether record orders can become revenue fast enough. Germany has pledged 145 billion euros in military spending next year as part of a 780 billion euro plan through 2030, but the sector has already come off a strong two-year run.
Rheinmetall’s first-quarter sales rose 7.7% to 1.94 billion euros, below analyst forecasts cited by Reuters, while operating profit rose to 224 million euros from 191 million euros. Operating margin, the share of sales left as operating profit, improved to 11.6%.
JPMorgan analyst David Perry cut his price target to 1,500 euros from 2,130 euros and downgraded the stock to “Neutral” from “Overweight”. Perry still expects years of growth from German defence spending, but said the shares face near-term headwinds. MarketScreener
The issue is execution. Perry wrote that Rheinmetall appears to be struggling to meet its own growth ambitions, having missed market expectations in four of the last six months, and said earnings estimate cuts looked more likely than upgrades. He trimmed his own forecasts through 2030 by as much as 5%.
Bernstein Research kept an “Outperform” rating and a 2,050 euro target, but analyst Adrien Rabier also put the burden back on growth. Rheinmetall needs to turn its large order book into sales and win major orders in traditional defence equipment to ease worries about the shift in modern warfare, Rabier wrote. Finanznachrichten
Rheinmetall pushed back with guidance. The company reaffirmed its 2026 target for sales of 14.0 billion to 14.5 billion euros and an operating margin of about 19%, saying growth should accelerate in the second quarter. Chief Executive Armin Papperger said the group was “well on course” to meet its annual goals. Rheinmetall
But the risk is that timing slips keep weighing on the stock. Rheinmetall said operating free cash flow fell by 527 million euros to minus 285 million euros, partly because inventories rose and working capital was tied up to support planned growth; its nomination volume, a measure that includes order intake and framework agreements, also fell 55% from a strong year-earlier quarter.
The backlog remains large. Rheinmetall said its order backlog rose to 73 billion euros at the end of March, including 5.5 billion euros from the newly consolidated Naval Systems business. The company said the first quarter was also affected by military trucks produced in advance for call-offs expected in later quarters.
The naval push is becoming a bigger part of the story. Rheinmetall has made a non-binding offer for German Naval Yards Kiel, putting it up against Thyssenkrupp Marine Systems, and Papperger said due diligence had started. “We have set ourselves very ambitious goals in this area,” he said. Reuters
The selling spread across German defence names. Finanzen.net reported Renk, Hensoldt and TKMS also traded lower on Friday, with Renk down more than 3% and Hensoldt down more than 1% at one point.
Rheinmetall’s shares had reached 2,008 euros in October, but have since lost more than a third of their value despite a still-favourable industry outlook. The next test is plain enough: show that the order book can move through factories, shipyards and delivery schedules at the speed investors priced in.
