(Update: share prices, market context, analyst commentary.)

FRANKFURT (dpa-AFX) - Rheinmetall shares swiftly shook off pre-market weakness on Tuesday following the release of its financial results and full-year guidance. While experts characterized the first-quarter figures as disappointing, they pointed to timing effects cited by the defense contractor and automotive supplier, expressing confidence that the shortfall will be recovered.

Investors appeared to share this sentiment: after a positive opening, the stock climbed 3.6 percent to nearly 1,439 euros by midday. This move extends the recent recovery and places the shares at the top of the Dax leaderboard. In its wake, industry peers Renk and Hensoldt also saw gains of 2.9 percent and 3.5 percent respectively in the MDax.

Rheinmetall fell short of expectations in several areas during the opening quarter. However, the company reaffirmed its 2026 targets and signaled a significant acceleration in growth for the second quarter. Analyst Afonso Osorio of Barclays also expects the sluggish start to the year to reverse in the current quarter, noting the high base of comparison from the previous year.

David Perry of JPMorgan believes this year will follow an inverse pattern to 2025, which saw a strong start followed by a weak second quarter. While investors have become far more critical regarding the execution of corporate ambitions compared to the 2022-2025 period, Perry finds the explanations for the weak start to the year plausible. Furthermore, he views price pullbacks as buying opportunities, noting that the shares have underperformed since the start of the year despite a surprisingly significant increase in German defense spending projected for 2027.

Just over a week ago, Rheinmetall shares hit a one-year low of nearly 1,310 euros. For 2026, the former high-flyer is currently recording a year-to-date decline of 7.8 percent. Between 2022 and 2025, Rheinmetall and the broader defense sector benefited significantly from conflicts in Ukraine and Iran.

Meanwhile, Bernstein expert Adrien Rabier remains optimistic about the stock's trajectory. Although the path toward the targeted 40 to 45 percent revenue growth in the defense business for 2026 may remain bumpy, he continues to view Rheinmetall as his preferred European industry pick and the dominant player in the crucial German market.

Yan Derocles of Oddo BHF was somewhat more cautious. While the first quarter is typically the company's seasonally weakest, he noted that the slow start increases the risks to full-year targets, even as Rheinmetall anticipates a sharp acceleration in business during the second quarter. Should this materialize, the stock is expected to rise in the coming months. However, for valuation reasons, Derocles prefers shares of industry peers Renk and Thales./gl/ag/jha/

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