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On Thursday, CFRA analyst Alan Lim Seong Chun upgraded Rheinmetall (ETR:RHMG) AG (RHM:GR) (OTC: RNMBY) stock from Hold to Buy, setting a new price target of EUR1,913.00. The upgrade reflects confidence in the company’s robust financial performance and its enhanced position in the global defense industry amidst rising geopolitical tensions. According to InvestingPro data, the stock has delivered an impressive 228% return over the past year and currently trades near its 52-week high, though analysis suggests it may be overvalued at current levels.
Rheinmetall reported impressive first-quarter results for 2025, with sales reaching EUR2.31 billion, a 46% year-over-year increase. The company’s earnings before interest and taxes (EBIT) and profit before tax also surpassed expectations, coming in at EUR199 million and EUR147 million, respectively. These figures notably exceeded consensus estimates of EUR1.95 billion in sales, EUR138 million in EBIT, and EUR121 million in profit before tax. InvestingPro data reveals the company maintains a robust gross profit margin of 51.88% and has achieved a 35.88% revenue growth over the last twelve months. For deeper financial insights and more than 20 additional ProTips, consider exploring InvestingPro’s comprehensive analysis tools.
The defense segment of Rheinmetall experienced a significant surge, growing 73% to EUR1.80 billion. This growth was primarily driven by the Vehicle Systems and Weapon and Ammunition divisions. The company also saw a substantial strengthening of its order situation, with the value of new orders and framework agreements more than doubling to EUR11.04 billion. Consequently, the total order backlog reached an unprecedented EUR62.56 billion. The company’s financial health score on InvestingPro is rated as GREAT, with particularly strong momentum and profitability metrics.
In light of these developments, CFRA has raised its earnings per share (EPS) projections for Rheinmetall. The 2025 EPS forecast increased slightly from EUR29.94 to EUR30.01, while the 2026 EPS estimate saw a more considerable adjustment from EUR41.15 to EUR43.18. The new price target of EUR1,913.00 is based on a forward price-to-earnings (P/E) ratio of 44.3 times the firm’s projected 2026 EPS. CFRA justifies the premium pricing, which is +3 standard deviations above the company’s three-year average forward P/E, citing the strong revenue growth and record order backlog as key factors. The stock currently trades at a P/E ratio of 91.56x, reflecting investors’ high growth expectations.
In other recent news, Rheinmetall AG has seen several updates from financial analysts regarding its stock performance and future prospects. JPMorgan has maintained its Overweight rating on Rheinmetall and increased the price target to €1,400, citing potential increases in German defense spending as a key factor. UBS also raised its price target for Rheinmetall to €1,600, maintaining a Buy rating, with expectations that the company’s revenues could exceed previous estimates. Meanwhile, BofA Securities adjusted its price target to €1,450, emphasizing Rheinmetall’s mid-term growth prospects despite lower-than-expected fourth-quarter results.
Additionally, UBS previously upgraded Rheinmetall from Neutral to Buy, raising the price target significantly to €1,208, reflecting optimism about increased defense spending. HSBC has maintained its Buy rating with a price target of €1,000, highlighting the potential benefits Rheinmetall could gain from increased EU defense spending. These recent developments indicate that analysts are optimistic about Rheinmetall’s future performance, driven by anticipated increases in defense budgets and strategic growth opportunities. The company’s alignment with potential defense spending increases positions it as a strong contender in the market.
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