Rheinmetall’s second-quarter earnings disappointed investors, with revenue rising 9% to €2.43 billion—4% below analyst forecasts—and operating profit edging up just 2% to €276 million. A €911 million free cash flow deficit and a 77% plunge in new orders to €2.6 billion compounded concerns, attributed to delayed German defense contracts post-elections. However, CEO confidence remains high, citing a record €63.2 billion order backlog and an anticipated year-end pipeline exceeding €80 billion. Market analysts overwhelmingly recommend buying, with 12 of 13 ratings bullish and an average price target of €2,086—27% above current levels.
Geopolitical Uncertainty Weighs on Sentiment
The stock initially dropped 8% amid rumors of potential peace talks between global leaders, stoking fears of reduced defense spending. Yet, most analysts view the dip as a buying opportunity, emphasizing Rheinmetall’s robust backlog and expected second-half acceleration. Political headwinds persist, including halted arms exports to conflict zones, but management’s €300,000 insider share purchase signals optimism. With legislative progress anticipated post-summer recess, the market appears poised to overlook short-term volatility for long-term gains.
