Defence sector in the analysts’ sights following the NATO summit; Rheinmetall shares fall

(Il Sole 24 Ore Radiocor) - Defence stocks are under scrutiny by analysts on the Frankfurt Stock Exchange, following the NATO summit in Ankara which has effectively shifted the alliance’s defence spending priorities away from traditional ground forces. The new NATO paradigm is weighing on the giant Rheinmetall, which has slipped to the bottom of the DAX index and is moving ever further away from its all-time high of 2,008 euros reached in October 2025. Two other German defence companies – Hensoldt and Renk – have also been hit by selling pressure (and are languishing at the bottom of the Stoxx Europe index).

Mwb Research has downgraded its recommendation on Rheinmetall from “buy” to “hold”, with a target price lowered from 1,400 to 1,150 euros, explaining that the NATO summit confirmed the reorientation of its priorities and spending. In Ankara, a shift in investment towards air defence, drones, long-range weapons, surveillance and naval capabilities, at the expense of the more traditional ground forces targeted by Rheinmetall’s ‘products’ (tanks, armoured vehicles, etc.). Furthermore, Mwb analysts believe that the market is significantly overvaluing the Arminius Project, the German programme for the renewal and expansion of the Bundeswehr’s armoured vehicle fleet. The report also highlights that the increasing scale of the joint ventures in which Rheinmetall holds a 51 per cent stake is leading to a rise in minority interests, thereby limiting the growth in net profit for Rheinmetall’s shareholders, despite the growth in the business.

As for Hensoldt, Mwb Research points out that hopes linked to the NATO summit had driven the share price up by around 26 per cent, to around 81 euros, but no contracts were announced or signed, nor were there any developments that might alter the forecasts. According to the brokerage firm, the rise in the share price was based more on “market sentiment” than on fundamentals. The analyst has therefore downgraded the stock from “hold” to “sell”, with a target price unchanged at 62 euros. Furthermore, Hensoldt could face competition from Saab, and authorisations for land-based programmes in Germany remain limited, increasing uncertainty regarding future tenders. Finally, Mwb Research has downgraded its recommendation on Renk from “buy” to “hold”, with a target price unchanged at 50 euros. Analysts believe that the group’s increasing diversification into naval activities provides some support, but does not fully offset the uncertainties surrounding future land vehicle programmes.