Shares of defense giant Rheinmetall plummeted after the company lowered its forecast. Should you buy them?

Shares of German defense giant Rheinmetall plummeted 16% after the company lowered its full-year profit forecast, citing delays in military contracts and ammunition deliveries. This is the company’s second downward revision—the previous one came in August, when Germany scrapped plans to build military ships, which would have been Rheinmetall’s largest order since World War II. Now, the 2026 forecast is being revised due to delays in the Bundeswehr’s Arminius Boxer project—whose commissioning has now been postponed until next year—as well as setbacks in the testing of artillery ammunition.

The company expects sales to rise to approximately €13.2 billion by the end of the year—the previous forecast had projected growth to €13.7–14.2 billion. The operating margin is expected to be around 18.5%, instead of the 19% previously forecast.

Since the beginning of the year, Rheinmetall’s stock has fallen by approximately 46%, after posting an average annual return of 114% over the previous four years. The company has been one of the main beneficiaries of the increase in military spending by European governments amid the military conflict in Ukraine.

RBC analysts called the revision a “clearly negative” factor that could heighten investors’ overall concerns about traditional defense technologies. “We believe that bears will view this negatively in the context of the ongoing debate within the sector between ‘new’ and ‘old’ technologies,” they said.

At the same time, the overwhelming majority of analysts—17 out of 21— recommend buying Rheinmetall shares, and none recommend selling. The average target price is €1,552, which represents a 54% upside potential relative to the last closing price.

This article was AI-translated and verified by a human editor