Rheinmetall shares: What's going on here?

Rheinmetall shares: What's causing the negative feeling

The cause for sharp price movements is a report in the news magazine"Der Spiegel". According to the report, German Defence Minister Boris Pistorius (SPD) is apparently planning to suspend the F126 frigate project. The main contractor for the multibillion-euro project is Naval Vesels Lürssen, which was purchased by Rheinmetall.

Instead, according to the report, Pistorius is now favouring Meko-,200 frigates from KMS as an alternative. This would be a major obstacle to Rheinmetall, as the headquarters defence company at Düsseldorf intended to significantly expand its maritime business with the purchase of the Navajo Vesels Lürssen.

Analyst sees a major hurdle for Rheinmetall

JPMorgan analyst David Perry described the development as a <x0-second major obstacle"for Rheinmetall. In its assessment, the company may now fail to achieve its orders targets for the second quarter and for the whole year. The expert praised the possible value of the order at around 12 billion euros.

At the same time, the political environment for Rheinmetall remains extraordinary. At a meeting of the Contact Group for Ukraine, led by Germany and Great Britain at NATO headquarters in Brussels, Ukraine was again promised about a billion dollars, or 900m euros, for American military equipment. Germany intends to contribute $200m. Through the so - called program PURL, European allies and Canada buy US-made weapons and ammunition, which later become available to Ukraine.

For Rheinmetall, this means that demand for ammunition, armoured vehicles, air protection systems and military equipment will likely remain high. However, most of this is already estimated in the stock market. The event has experienced a tremendous increase in recent years, its assessment is difficult, and any doubts about the pace, financing or margins can soon lead to the extraction of profits.

Rheinmetall shares: Buy now?

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