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Investing.com - Barclays initiated coverage on Rheinmetall AG (ETR:RHM) (OTC:RNMBY) with an Overweight rating and a price target of EUR2,050.00.
The German defense contractor is positioned to capture significant market share in Europe over the next decade, according to Barclays. The company benefits from high exposure to Germany’s defense budget, which represents 30% of its total revenues, and a visible order book expected to grow from EUR63 billion currently to over EUR120 billion by 2026.
Barclays projects Rheinmetall’s revenue will reach EUR48 billion by 2030, with margins expanding to approximately 20% compared to 15.2% in 2024. The firm forecasts an earnings per share compound annual growth rate of 39%.
The investment bank believes the market underestimates the longevity of Rheinmetall’s backlog even if demand eventually slows in some areas. Barclays estimates the company could grow 7-8% annually during the 2030-2035 period after growing by 30% until 2030.
Barclays expects Rheinmetall to increase its European market share from approximately 5% currently to around 30% by the mid-2030s, justifying a premium to the company’s long-term average multiple of 10.6x.
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