Rheinmetall's Spanish Ammo Line Opens as Berenberg Cuts to Hold and Bulls Bet on Year-End Budgets
Published on 10/17/2026 at 13:40 | Editorial boerse-global.de
Rheinmetall has fired up a new production line for medium-calibre components at its Albacete site in Spain, a roughly EUR 20 million investment aimed at loosening bottlenecks in ammunition parts and meeting demand from European NATO partners. The Rheinmetall Expal Munitions facility is designed to turn out about 1.2 million projectiles and 1.8 million cartridge cases a year in calibres between 20 and 35 millimetres, with the local workforce set to grow from around 210 to roughly 300 — an increase of about a third.
The Spanish ramp-up slots into a far larger build-out. By 2030 at the latest, the group is targeting annual capacity of 1.5 million artillery shells in the NATO-standard 155-millimetre calibre plus four million medium-calibre components.
An Order Book Past EUR 80 Billion
Those factories are being built against a backlog that keeps swelling. At the end of June, the volume of existing orders and framework agreements topped EUR 80 billion, and management has dangled an increase to between EUR 100 billion and EUR 120 billion by year-end. A major Bundeswehr order for Boxer infantry fighting vehicles is among the potential drivers.
The group is also laying groundwork beyond Europe. Under a project with US partner Lockheed Martin, Rheinmetall is to build ATACMS long-range missiles to replenish American stockpiles — though chief executive Armin Papperger has said the industrial run-up requires more than two years of lead time, with first revenues from the joint venture expected only in 2028. Rheinmetall is additionally weighing a takeover of Iveco's military truck division.
Should investors sell immediately? Or is it worth buying Rheinmetall?
Financial flexibility got a boost earlier this month when the syndicated credit line was renewed ahead of schedule and doubled from EUR 750 million to EUR 1.5 billion. On the international front, the US subsidiary American Rheinmetall presented combat vehicles, air-defence and autonomous systems for the US Army at the AUSA trade fair, while Rheinmetall Defence Australia and Praetorian Aeronautics reported delivery of a containerised counter-drone system.
Two Narratives, One Share Price
The equity finished Friday's session up 5.4% at EUR 1,090.20, a move that owed less to any single company release than to a broad bid across the European defence sector. Media reports pointed to Morgan Stanley as a key catalyst, citing the prospect of additional orders from the German federal budget toward year-end and a possible seasonal rally in defence names. Political theatre added fuel: a meeting between the European Union and Volodymyr Zelenskyy in Brussels, together with continuing debate over the future scale of US military aid to Ukraine, pushed European procurement programmes back into the spotlight.
For investors, the moment marks a fork in the road. After months of grinding consolidation, the market is asking whether the recent rebound is the start of a durable uptrend or merely a short-lived countermove. The stock still sits 45% below its 52-week high of EUR 1,965.00, struck in January — a gap that captures the scepticism lingering among part of the investor base.
The cautious camp found loud expression about a week ago, when private bank Berenberg downgraded Rheinmetall from "Buy" to "Hold" and cut its price target from EUR 1,600 to EUR 1,020. The analysts cited uncertainty over medium-term growth prospects after 2030. Critical voices also warn that the massive expansion of production capacity carries high fixed costs; should political momentum fade or future governments trim defence budgets, overcapacity and pressure on margins loom. On the other side, Bernstein Research reaffirmed its "Outperform" rating roughly a week ago, backing the bulls' view that the company is optimally positioned to profit from sustained Western rearmament.
The Question Shifts From Threat to Contracts
What the market is now really pricing is the speed at which political declarations turn into legally binding procurement contracts. Investors are rewarding the expectation that approved budget funds in the German defence budget will flow swiftly into industry order books, shifting the valuation focus from threat perception to contractual reality. Should the hoped-for budget decisions slip or come in smaller than anticipated, the sector's recent recovery would rest on fragile foundations.
The next hard anchor for a reassessment is 5 November 2026, when Rheinmetall reports third-quarter 2026 results and must show whether the operating business is keeping pace with lofty expectations. Until then, the criteria are fairly clear: as long as the share price defends its recent lows and fresh defence orders from European capitals underpin the production expansions, the recovery scenario stays intact — and confidence in a seasonally strong year-end could draw further capital. If political support for extra defence spending tips the other way, or the expected orders from the federal budget fail to materialise, concerns about long-term growth rates are likely to regain the upper hand.
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