On the Berlin Tarmac, Rheinmetall Shows Off Its Future — But Wall Street Isn't Buying It Yet
10.06.2026 - 16:37:51 | boerse-global.de
The ILA Berlin air show is supposed to be a moment of triumph for Rheinmetall. The DĂĽsseldorf-based defence group has stripped away its last civilian ties, signed a landmark joint venture for satellite reconnaissance, and flown in a full-scaled mock-up of a revolutionary autonomous fighter developed with Boeing. Yet the stock continues to trade like a wounded bird, nearly 40% below its all-time high and under pressure from a fresh Wall Street downgrade.
On Tuesday, Morgan Stanley cut its rating on Rheinmetall to Equal-weight, pulling the trigger on a broader reassessment of the European defence sector. The move coincided with the opening of ILA Berlin, where Rheinmetall occupies 840 square metres of exhibition space — a physical testament to its ambitions beyond tanks and ammunition. Analysts at the US bank now see less upside in a stock that has already lost about a quarter of its value since the start of the year.
A €350 million divorce from civilian life
The market’s lukewarm reception stands in stark contrast to the strategic clarity the company has achieved. Earlier this month, Rheinmetall sold its Power Systems division to the private equity firm Aequita for €350 million, formally cutting ties with the civilian automotive business that had once been a drag on margins. The move leaves the group as a pure-play defence contractor — more exposed to government budgets, but also more focused.
That focus was on full display in Berlin. Alongside the MQ-28 Ghost Bat, developed in partnership with Boeing, Rheinmetall showcased its ICEYE satellite joint venture, which recently secured a framework contract with the Bundeswehr for radar imagery. A loitering munition called the FV-014, bridging the gap between drone and artillery, also received prominent billing.
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Two different order books, one big question
The order pipeline looks unstoppable on paper. The company’s backlog has swelled to around €73 billion, according to recent company statements, while the primary article notes that a record of nearly €64 billion was already reached by the end of 2025. Yet revenue conversion remains sluggish. In the first quarter, sales came in at just €1.94 billion, forcing management to pin its hopes on a strong second half to hit the full-year target of €14 billion.
Investors are not convinced. The stock changed hands between €1,203 and €1,211 on Wednesday, well below its 200-day moving average of roughly €1,617. The price-to-earnings ratio of around 32 leaves little room for execution errors. Morgan Stanley’s downgrade underscores the institutional shift from euphoria to a more sober assessment of operational risks.
A new competitor adds to the headwinds
Adding to the pressure, the Franco-German armoured vehicle maker KNDS is preparing to list on the stock exchange this summer with a valuation of up to €20 billion. The state-backed rival will intensify competition in Rheinmetall’s core land-systems market, potentially squeezing margins or slowing order growth.
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Chief executive Armin Papperger, however, is betting his own money on a recovery. He recently bought Rheinmetall shares worth more than €5 million in the open market — a vote of confidence that has done little so far to stem the selloff.
The next test comes in August
All eyes now turn to 6 August, when Rheinmetall publishes its half-year results. That report will provide the hard data showing whether the group can turn its €73 billion backlog into real revenue growth. Until then, the gap between the company’s transformation story and its stock price remains wide — and Morgan Stanley, at least, is content to wait on the sidelines.
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