Rheinmetall Draws a Double Verdict: Softer Targets From Analysts, a 50% Excess-Profit Levy From the Left
Published on 11/10/2026 at 08:51 | Editorial boerse-global.de
Rheinmetall shares picked up 2.4% in pre-market trading on Wednesday, a modest rebound that sits awkwardly beside two very different pressures now bearing down on the German defence group. On one side, brokers are trimming their price targets after the company's guidance cut. On the other, a political proposal from Die Linke would slap a 50% surcharge on defence-industry excess profits — with Rheinmetall named as the showcase calculation.
Berenberg Joins the Retreat
Berenberg lowered its target for Rheinmetall to EUR 900 from EUR 1,020, keeping a "Hold" rating. Analyst George McWhirter pointed to execution risks and the predictability of demand as the reasons behind the move.
That came a day after Bank of America downgraded the stock from "Buy" to "Neutral," cutting its target to EUR 900 from EUR 1,300. BofA cited weaker growth expectations for armoured vehicles and artillery following the company's guidance reduction.
The rest of the sell-side is not marching in lockstep. One house upgraded Rheinmetall from "Hold" to "Buy" while leaving its EUR 1,050 target untouched. Another trimmed its target to EUR 1,100 from EUR 1,350 but stood by its buy recommendation.
Should investors sell immediately? Or is it worth buying Rheinmetall?
What Triggered the Cuts
Just over a week ago, Rheinmetall lowered its 2026 revenue forecast to roughly EUR 13.2 billion, down from an earlier range of EUR 13.7 billion to EUR 14.2 billion. The operating margin outlook slipped to about 18.5% from around 19%.
Management blamed delays in awarding the Boxer project Arminius and in lot acceptances for artillery ammunition. As a result, some revenue will slide into 2027 rather than land in the 2026 books.
A Tax Proposal With Rheinmetall's Name On It
Die Linke unveiled its excess-profit tax plan on Tuesday. Under the proposal, defence companies with a revenue margin above 5% and annual sales of at least EUR 1 billion would face an additional 50% levy on excess profits. The charge would sit on top of corporate and trade tax, and the draft contains no sunset clause — meaning investors would need to weigh not only the size of any hit but also how long it might last, should the plan become law.
According to taz, Die Linke puts the total tax burden on excess profits, including existing taxes, at 72–86%. That range reflects the party's own calculation for the most heavily taxed slice of profit.
The proposal pairs a profitability threshold with a company-size floor. For Rheinmetall, the details of the final design would matter most: any extra taxation above the proposed threshold would reduce after-tax profit if enacted.
The Numbers Behind the Headline
As reported by nd, Die Linke estimates potential revenue from such a tax at Rheinmetall alone at EUR 538 million for 2025. The company's revenue margin that year stood at 15.82%, according to the report. That estimate turns Rheinmetall into the concrete reference point for the initiative — a burden of that order would matter to shareholders, provided the eventual statutory base matches the party's arithmetic. The figure remains an estimate of possible tax receipts.
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The political case reaches beyond any single company's earnings. Taz cites a June 2025 University of Mannheim study finding that additional defence spending, where competition is thin, tends to lift prices rather than output. The debate therefore also touches on how much extra public spending actually flows through to corporate profit — a political risk for Rheinmetall if the proposed levy wins parliamentary backing.
The Calendar Ahead
Bundestag deliberations are scheduled for early 2027. Until then, attention will focus on the intended scope, the profit threshold and the size of the additional tax load. For investors, the decisive checkpoint lies in the legislative process: Rheinmetall's high margin would bring it within the proposed criteria, but a concrete burden only arises if a rule is actually passed.
For now, the stock is caught between two clocks — the slow one of committees and draft bills, and the faster one of analysts resetting their models after a guidance cut.
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