Rheinmetall Now a Buy After 40% Pullback From Peak, Says Analyst

mwb Research has upgraded Rheinmetall (ETR: RHM) to Buy from Hold, arguing that the German defense contractor’s sharp share price decline has reset valuations to levels not seen in years and that the risks driving the selloff are not new.

Analyst Jens-Peter Rieck kept his price target unchanged at 1,450 euros, implying upside of roughly 19% from Monday’s close, after Rheinmetall shares lost approximately 40% from their 2025 peak.

The decline was triggered in part by chief executive commentary on the long-term role of land-based weapons systems and a structural shift toward cheaper drones, both of which mwb Research said are already reflected in its model.

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The firm said it views the selloff as “an entry point that has not been available for a long time,” noting that fiscal year 2027 estimated enterprise value-to-EBITDA has compressed to roughly 12 times, returning to the historical median range and representing approximately half the peak multiple seen earlier in 2025. The forward price-to-earnings ratio has similarly declined to 24 times from a peak of 70 times.

mwb Research’s model already assumes a full cycle with a 200 basis point EBIT margin contraction from peak, a 12% revenue decline and a 24% free cash flow decline, though it acknowledged that “the magnitude and timing of any eventual reversal remain highly uncertain.”

The upgrade was further supported by notable insider activity, with the chief executive purchasing more than 1 million euros of Rheinmetall stock last week, which mwb Research said “supports the bull case again.”