Rheinmetall's Double Squeeze: Investor Exodus and a Billion-Euro Frigate Overhang
25.05.2026 - 17:22:23 | boerse-global.de
The defence sector's favourite puzzle has a new twist. Rheinmetall shares are trading at roughly EUR 1,242 — nearly 40% below their 52-week peak — and yet every major bank covering the stock still slaps a "Buy" or "Overweight" on it. Three analysts have slashed their price targets in recent days, but not one of them has downgraded. That incongruity is now compounded by a second, more tangible concern: a top US shareholder has just bailed.
FMR LLC, the Boston-based asset manager, cut its stake in the Düsseldorf group below the three-percent reporting threshold on 18 May, filing the mandatory disclosure three days later. The timing stings. FMR's retreat lands just as the stock shows tentative signs of stabilising after a brutal slide — down almost 24% since the start of the year and roughly 34% over twelve months. The move echoes a broader sentiment gap: operational strength at the company continues to contrast sharply with the market's mood.
The analyst community remains emphatically bullish, though the numbers have clearly been recalibrated. Jefferies analyst Chloe Lemarie lowered her target from EUR 2,220 to EUR 1,890, citing execution risk on land defence programmes, but kept her "Buy" rating intact. UBS’s Sven Weier was more aggressive, slashing his target by over 27% from EUR 2,200 to EUR 1,600 — yet he too stuck with a buy recommendation, pointing to the high-margin ammunition business and the Boxer armoured vehicle as overlooked growth engines. Barclays breaks ranks entirely: with a EUR 2,035 target and an "Overweight" rating, it sees upside of more than 60% from current levels. Analyst Afonso Osorio flags a strong second quarter, a massive order book, and necessary capacity investments as catalysts.
Should investors sell immediately? Or is it worth buying Rheinmetall?
All three targets still sit well above the market price, but the stock has a long way to climb to get there. The relative strength index has hit 90, signalling technically overbought conditions after last week’s rally of roughly 4%. Yet the 200-day moving average lurks near EUR 1,644 — a full 24% above Monday’s level. The 52-week low of EUR 1,118, touched on 13 May, is now nine percent behind the stock, while the high of EUR 1,995 from last year remains a distant memory.
What is really spooking investors, however, is not a lack of business but the pace at which it converts into cash. The F126 frigate programme for the German navy has become a lightning rod for that anxiety. Rheinmetall is demanding around EUR 12 billion from the federal government to take over the project from the Dutch DAMEN shipyard, pushing total costs for the six vessels to roughly EUR 14 billion. Berlin has already allocated EUR 2 billion for the initial phase. The offer includes an inflation clause and targets first delivery for 2032 — four years behind schedule due to software problems that stalled the transfer of construction plans from the Netherlands to German yards. On top of that, the Düsseldorf Higher Regional Court has declared a key provision of the Bundeswehr procurement acceleration law unconstitutional, sending the case to the Federal Constitutional Court. The legal uncertainty could ripple across every large-scale defence contract.
To its credit, the company’s underlying fundamentals remain robust. The order backlog, including framework agreements, stood at EUR 73 billion as of 31 March, up from EUR 56 billion a year earlier. Roughly 97% of planned 2026 revenues are already under contract. Rheinmetall’s full-year guidance calls for sales between EUR 14 billion and EUR 14.5 billion, with an operating margin of 19%. The EUR 11.50 dividend per share was paid out after the May annual general meeting — that particular near-term catalyst is now in the rearview mirror.
Next quarterly results are due on 6 August 2026. Between now and then, concrete contract wins under European defence initiatives and the resolution — or further entanglement — of the F126 negotiations will likely dictate the share price trajectory. The analysts’ confidence has not cracked, but the gap between their price targets and the actual stock has rarely been wider. The question is whether the market will wait for the fundamentals to catch up, or force another round of cuts first.
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