Rheinmetall's Transformation Is Complete — But the Market Still Sees a 40% Gap
11.06.2026 - 14:34:01 | boerse-global.de
Rheinmetall is executing one of the most dramatic pivots in European defence contracting. On the tarmac of the ILA Berlin air show, the German company unveiled a space alliance, signed off on the sale of its last civilian division, and pushed deeper into autonomous drone warfare. Yet investors remain nonplussed: the stock stands at around €1,212, roughly 23% below where it began the year and 40% adrift of its September 2024 record high of €1,995.
The centrepiece of this strategic overhaul is the RISS joint venture, in which Rheinmetall holds a 60% stake alongside satellite operator ICEYE. The company is building a constellation designed to deliver real-time, sovereign reconnaissance data for Germany and its NATO allies, free from reliance on foreign providers. Four NewSpace partners have been brought on board: Reflex Aerospace supplies satellite platforms, OroraTech adds thermal-sensor technology, ConstellR contributes high-resolution infrared data, and LiveEO provides AI-driven geospatial analysis. The system will eventually generate SAR-based, all-weather imagery from a facility in Neuss, feeding the alliance's eastern flank.
Alongside the space push, Rheinmetall has signed a purchase agreement to offload its Power Systems division to the Munich-based industrial holding Aequita. The deal is expected to close in the fourth quarter of 2026. By jettisoning its last civilian unit, the management is clearing the decks for a pure defence portfolio centred on autonomous systems, space-based sensors, and conventional land, air, and sea equipment. Analysts view the move as a logical response to geopolitical pressure and the need to scale military capacity — but it also removes a buffer that once diversified the company's earnings stream.
Should investors sell immediately? Or is it worth buying Rheinmetall?
On the Berlin show floor, Rheinmetall emphasised its growing unmanned capabilities. The MQ-28 Ghost Bat, a collaborative effort with Boeing, is being adapted for the Bundeswehr and is slated for certification from 2029. The company also secured a fresh A$72 million framework agreement with Australia to establish a new munitions production line. These contracts, together with the space expansion, are meant to reduce the group's historical over-reliance on large land-system orders.
Compounding the market's caution, Morgan Stanley recently downgraded the entire European defence sector to equal-weight, citing fading momentum in earnings revisions. While the long-term outlook is underpinned by rising defence budgets, the short term lacks the catalysts to reignite investor enthusiasm. The stock's technical picture reinforces the unease: with a relative strength index of 44.1, the shares are neither overbought nor oversold, but they trade well below the 200-day moving average of €1,607 — a clear signal that the trend remains bearish.
The real test for Rheinmetall will come when it must deliver on the promised margin expansion in the second half of 2026. With Power Systems gone and the new domains of space and drones yet to contribute materially, the company's ability to scale production efficiently will determine whether the current 40% discount to the peak is a buying opportunity or a warning of further downside.
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