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Investing.com - Goldman Sachs initiated coverage on German defense contractor Rheinmetall AG (ETR:RHM) with a Buy rating and a price target of EUR2,200.00, representing approximately 13% upside potential.
The investment bank identified Vehicle Systems and Weapons & Ammunition divisions as the core of Rheinmetall’s business, together accounting for more than 80% of the company’s EBIT in 2024. Both segments align directly with Europe’s near-term defense capability gaps.
Goldman Sachs forecasts a 43% EBIT CAGR for the Vehicle Systems division from 2024 to 2027, driven by growth in armored vehicles and trucks. The Weapons & Ammunition segment is expected to achieve a 38% EBIT CAGR over the same period, primarily from increased production of 155mm shells and medium caliber ammunition.
These growth projections support Goldman’s forecast of a 27% group-wide EBIT CAGR from 2025 to 2030, placing their estimates approximately 1% above consensus for fiscal year 2026 and 3% above for both 2027 and 2028.
The price target implies a 34x 12-month forward EV/EBIT multiple for Rheinmetall , which also trades in the U.S. as an OTC stock (OTC:RNMBY).
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