Rheinmetall Battered by Twin Setbacks: Cancelled Frigate and a Munitions Reckoning
Published on 07/18/2026 at 15:41 | Redaktion boerse-global.de
Rheinmetall’s stock has been cut nearly in half from its 2025 peak, and two distinct headwinds are now converging to test the narrative that once made it Europe’s defence darling. A multibillion-euro frigate programme has been scrapped, and one of Wall Street’s most influential banks has slashed its profit forecasts for the weapons and ammunition division, arguing that the battlefield of the future will demand a very different arsenal.
The first of those blows landed in early July when a report in Der Spiegel revealed that the German government had halted the F126 frigate project for the Bundeswehr. Rheinmetall had been expected to play a central role in the programme, valued by one analyst at roughly €12 billion. The news triggered a single-day share collapse of 18.65% and left the company facing a likely shortfall in its second-quarter and full-year order intake. Management will have to adjust guidance when it next reports.
Days earlier, Bank of America had already turned more cautious. Analyst Benjamin Heelan cut his price target on Rheinmetall from €1,770 to €1,300 while keeping a buy rating. He reduced his forecast for munitions revenue in 2030 to around €10 billion with a 24% margin, far below the company’s own target of €14–16 billion at roughly 30%. The implied operating profit from that division drops to about €2.4 billion, versus the group’s earlier ambition of €4–5 billion. For the entire group, BofA now sees revenue of just €35 billion in 2030, down from a prior estimate of €50 billion.
Heelan’s reasoning reflects a structural shift in defence spending. Conflicts in Ukraine and the Middle East, he notes, are moving budgets away from conventional artillery toward drones, precision weapons, and air defence. NATO’s push for autonomous systems will reinforce that trend. Rheinmetall’s heavy exposure to traditional munitions and armoured vehicles makes it more vulnerable than the market had assumed.
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Other houses have followed suit. Barclays, Deutsche Bank, and J.P. Morgan all trimmed their price targets in recent weeks. JPMorgan’s David H. Perry emphasised the accelerating pace of technological change as a source of uncertainty. More dramatically, MWB Research’s Jens-Peter Rieck cut his recommendation to sell after the F126 loss, arguing the contract had been a “crown jewel” that justified Rheinmetall’s earlier acquisition of Naval Vessels Lürssen.
The shares closed on Friday at €978.00, gaining 1.85% on the day but still down roughly 16% over the past month and 37% since the start of the year. At the 52-week high of €1,995 set in September 2025, the stock has surrendered just over 51%. It now sits only about 8% above the 52-week low of €902.50 reached on 25 June. The relative strength index of 37.5 suggests weak momentum without yet signalling a classic oversold condition. Annualised 30-day volatility stands above 69%, reflecting the market’s expectation of sharp swings in either direction.
The wider defence sector shows no clear alignment. Jefferies lifted its target on HENSOLDT to €94 with a buy rating, while mwb research slapped a sell on the same stock, valuing it at just €62. For RENK, the DZ Bank cut its fair value to €64 after the Eurosatory trade fair, whereas Jefferies stood by its buy call at €60. TKMS, meanwhile, pocketed several large contracts over the summer, including the frigate programme that slipped from Rheinmetall’s grasp, yet still faces shifting analyst opinions.
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Optimists point to Rheinmetall’s order book, which remains hefty at roughly €73 billion. The company’s “Vision 2030” strategy, combined with investments like the new plant in Neuss, underpins the long-term growth story. But valuation metrics are stretched: the price-to-earnings ratio sits in the high double-digits or triple-digits depending on the earnings base, and the dividend yield of barely 1% offers little comfort for income-focused investors.
The next quarterly report will be the first real test of how deeply the F126 cancellation cuts into incoming orders and whether the order book can compensate faster than the bears expect. Until then, Rheinmetall is caught between a cancelled frigate and a fundamental rethink of what the next generation of defence spending will actually buy.
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Rheinmetall Stock: New Analysis - 18 July
Fresh Rheinmetall information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
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