Rheinmetall Shares Surge After Profits More Than Double in Q2
Rheinmetall's shares soared in early trading on Wednesday, following a strong second quarter that saw profits more than double. The defense giant's stock gained around three percent, settling above the 500 euro mark.
The positive business development was driven by advanced sales in the weapons and ammunition segment, along with a higher contribution from Rheinmetall Expal Munitions. The operating result soared to 271 million euros, surpassing analysts' expectations.
Higher military spending by Western states also contributed to the high profits. Rheinmetall is seen as a key beneficiary of the defense build-up in the West, with the planned joint tank production with Leonardo from Italy viewed positively. Despite the strong quarter, the company confirmed its annual targets.
UBS, however, warns that additional defense spending in Europe may already be priced into the stock, suggesting a potential sideways movement after the rally. Some analysts, like DZ Bank, have raised their price targets for Rheinmetall, increasing their fair value estimate to 556 euros and recommending a buy.
Rheinmetall will publish its full quarterly results on August 8. Despite UBS's caution, the company's strong performance and positive outlook have led some analysts to raise their price targets. Major shareholders, including institutional investors like The Vanguard Group and BlackRock, did not publicly announce increased selling activity in 2022 that might influence the stock price.
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