The news about the armaments giant Rheinmetall is currently coming thick and fast: A stock market promotion, a strategic partnership and a meeting of NATO members are putting the German company in the spotlight. Rheinmetall has not been able to complain about a lack of attention for a long time. Since the start of the war in Ukraine, the share price has not only risen significantly, but the company is also seen as an important player in the security policy transformation in Europe. The latest developments surrounding the Düsseldorf-based company underline these aspects.
Let's start with the share: Rheinmetall has been a member of the EURO STOXX 50 since Monday, June 23, 2025. This is the first time that the armaments giant has been included in the European stock market olympus. This in turn could give the stock a new boost. This is because funds and ETFs that physically track the index will have to adjust their portfolios accordingly, which could lead to additional demand for Rheinmetall. In addition to this so-called "index effect", potentially higher liquidity also suggests increasing interest among institutional investors. Added to this is the possibility of broader coverage by analysts.
A partnership with the US armaments start-up Anduril has also recently attracted a great deal of attention. Rheinmetall is using the American company's drones and the associated AI technology. The devices are to be integrated into a networked digital military platform called "Battlesuite". The two companies also want to develop joint missiles and manufacture solid rocket motors for the European market. With autonomous flight systems, the world's largest ammunition manufacturer is entering a new segment, which a look at the books of Anduril, which was founded in 2017, reveals to be very fast-growing. The company has already received numerous orders from the US government and doubled its turnover to USD 1 billion last year. According to Rheinmetall CEO Armin Papperger, the "systems are tailored to the changing requirements of NATO".
Speaking of NATO: at the recent summit in The Hague, the members of the alliance agreed to invest at least 5% of their gross domestic product (GDP) in defense in the future. The NATO members should reach the new target in ten years at the latest. This represents a significant increase compared to current defense spending. This is only at least two percent of GDP. Under pressure from US President Donald Trump and the threat from Russia, significantly more money will therefore flow into armaments in the future. In Germany alone, where a rate of 2.1% was achieved last year, every additional percentage point currently means around EUR 45 billion more in expenditure.
However, even without these additional billions, business at Rheinmetall is already running at full speed. From January to March, sales soared by 46% to EUR 2.3 billion, while profit after tax even doubled to EUR 108 million. Rheinmetall confirmed its annual targets due to the high demand, with incoming orders increasing by over 180% to EUR 11 billion, particularly as a result of orders from the German armed forces. Sales are expected to increase by 25% to 30% and the operating return on sales to improve to around 15.5% (previous year: 15.2%). The government's new defense spending is not yet included in the forecast. CEO Papperger is also looking ahead confidently to the end of the decade. Rheinmetall could generate revenues of more than EUR 40 billion in 2030, which would represent a fourfold increase compared to 2024. Production is currently being significantly expanded in order to be able to process the expected flood of orders. To this end, factories in the civilian division are even being converted for military purposes.
Possibly in line with the motto "buy the rumor, sell the news", investors have recently applied the handbrake to Rheinmetall shares. After a price rally of around 250% in just one year, the blue chip is currently consolidating in the EUR 1'700/1'800 range. According to the majority of analysts, however, the stock's potential has not yet been exhausted. Rheinmetall currently has a buy rating and the average 12-month target price of EUR 1'982.50 is around 14% above the current price level.
With a view to the 2'000 mark, the air upwards seems to be getting thinner. Among other things, yield optimization products fit in with this assessment. Leonteq has launched two new soft-callable BRCs, which have a comfortable risk buffer of 41% and at the same time offer a return almost comparable to what the consensus currently expects from the share over the next 12 months. The CHF variant offers the prospect of a maximum return of 10.00% p.a., with the EUR paper even offering 12.00% p.a. Unlike the classic variant, the interest payment is not guaranteed without further ado. In order to receive the coupon pro rata, the Rheinmetall share must be above the coupon trigger level on the quarterly observation dates. However, this hurdle is not particularly demanding, as the threshold is 50% of the initial level. If the interest payment is nevertheless not made on a key date, it is not lost at the same time. Due to the memory function, the payout can be made up for if the underlying instrument is quoted above the coupon trigger level again on one of the following observation dates. No price increases are required for the products to achieve the maximum yield within the maximum term of one year. The term may be shortened due to the soft callable function. Every three months, at the earliest after 6 months, the issuer has the right to early redemption at 100% for both BRCs.
However, Rheinmetall does not have to stop at just under EUR 2'000; some research houses have significantly higher price targets than the consensus. The US bank JPMorgan, for example, sees scope up to EUR 2'100, UBS even up to EUR 2'200. Speculative investors can still accelerate the way up there. Leonteq's broad range of products includes mini-futures, warrants with knock-outs and classic warrants on the defense stock, which offer the prospect of leveraged participation. However, it is not only possible to take a long position; shorts can also be used to turn price setbacks into disproportionately high profits.
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