Rheinmetall’s €73 Billion Backlog Shields Shares from Berlin’s Budgetary Axe
Published on 07/28/2026 at 20:41 | Redaktion boerse-global.de
The defence contractor’s stock has clawed back more than 20% from its 52-week trough of €902.50, with Tuesday’s session adding another 2.53% to push the price to €1,086.60. On a weekly basis, the gain stretches to 8.81%, while the monthly picture shows an advance of 11.73%. Yet the recovery remains tentative, shadowed by a preliminary German budget draft that threatens to slash munitions spending next year.
According to a Bloomberg report, Berlin’s 2027 budget blueprint allocates roughly €9.6 billion for ammunition procurement, down from approximately €11 billion in the current fiscal year. The figures are provisional and subject to legislative wrangling, but the signal has rattled investors who had piled into the sector on expectations of sustained military spending. Rheinmetall’s heavy exposure to tanks, artillery, and ammunition makes it particularly vulnerable to any reordering of priorities within Germany’s broader defence envelope.
The political headwind compounds a difficult stretch for the stock. In June, the cancellation of the F126 frigate project triggered a single-day rout of 19%, and China has since imposed export controls targeting 14 European companies, including Rheinmetall. The company has publicly shrugged off these pressures, maintaining its 2026 guidance for revenue between €14.0 billion and €14.5 billion alongside an operating margin of roughly 19%. A formal reassessment will wait until the half-year results on 6 August.
Should investors sell immediately? Or is it worth buying Rheinmetall?
What anchors the bull case is the order book. Rheinmetall’s backlog stood at €73 billion at the end of the first quarter, a year-on-year increase of about 31%. That figure dwarfs the company’s 2025 revenue of roughly €9.9 billion — itself up 29% — and the operating profit of €1.84 billion. The sheer scale of contracted work provides multi-year production visibility, insulating the group from the vagaries of any single budget line item.
Analyst targets reflect the tension between near-term political noise and long-term structural demand. UBS rates the stock a Buy with a €1,600 price objective, while JPMorgan holds a neutral stance at €1,350. More bullish are Deutsche Bank at €1,800 and Barclays at €2,000. All four sit comfortably above the current trading level, but the wide dispersion underscores how differently the risks from Berlin and Beijing are being priced in.
The market’s jitters are evident in the volatility metrics. The annualised 30-day figure stands at 68.12%, and the relative strength index of 55.9 points to neither overbought nor oversold conditions. That leaves plenty of room for sharp moves in either direction when the half-year report lands in early August — the first real opportunity for management to address how the munitions budget debate might feed into its 2027 outlook.
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