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Investing.com - BofA Securities raised its price target on Rheinmetall AG (ETR:RHM) to EUR2,225.00 from EUR2,090.00 on Tuesday, while maintaining a Buy rating on the German defense contractor’s stock.
The price target increase follows Rheinmetall’s announcement of its acquisition of Naval Vessels Lürssen (NVL), which BofA views as a positive development with an attractive multiple on a cash-free and debt-free basis.
BofA notes the acquisition expands Rheinmetall into a new vertical within the defense sector and enhances its mid-term pipeline of opportunities, with significant potential to vertically integrate more weapons systems, ammunition, and projectiles used in the naval segment.
According to BofA, Rheinmetall projects EUR5 billion in revenue opportunities from the Naval business line by 2030, with approximately EUR3 billion expected from Germany and EUR2 billion from international opportunities.
NVL currently generates a 10% margin, but Rheinmetall anticipates the potential for the business line to exceed 15% by the end of the decade as it vertically integrates more systems within the naval segment.
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