(Update: Share price, details, and additional analyst commentary)
FRANKFURT (dpa-AFX) - After a recent pause in its record-breaking rally, JPMorgan sees significant upside for Rheinmetall shares. With its newly raised price target, the US bank stands among the market's most bullish voices. Following losses the previous day amid volatile trading, Rheinmetall shares rose 1.7 percent to EUR1,726.50 on Friday, topping the DAX in a generally weak market.
JPMorgan increased its price target from EUR2,100 to EUR2,250 after the defense and automotive supplier briefed analysts on its upcoming second-quarter results. This implies a further 30 percent upside potential. Only the investment bank Exane BNP has set a higher target, at EUR2,300.
JPMorgan analyst David Perry raised his earnings estimates for Rheinmetall through 2030 by as much as 21 percent. He believes 2030 will not mark the company's peak, suggesting Germany will need at least another decade to rebuild its military capabilities.
Perry expects German defense spending to outpace that of other European countries. He anticipates potential orders worth EUR70 billion over the next twelve months, calling Rheinmetall his top pick among Europe's major defense manufacturers in this context.
Additional momentum came ahead of the weekend from Deutsche Bank Research analyst Christoph Laskawi, who raised his Rheinmetall price target to EUR1,950. He also emphasized that Germany is likely to invest more in defense than previously discussed, and Rheinmetall stands to benefit significantly from these investments.
At the end of June, NATO agreed to an unprecedented increase in defense spending. By 2035 at the latest, NATO member states are expected to allocate five percent of their gross domestic product annually to defense and security.
Rheinmetall's record share prices were reached several weeks ago, peaking at EUR1,944 in early June. Since then, shares have consolidated after a rally that began in early 2022 following Russia's invasion of Ukraine. Before the war, Rheinmetall shares traded around EUR90; at their peak, they were worth more than 21 times that amount.
So far this year, Rheinmetall shares have gained over 180 percent. Recently, the stock has been consolidating at a high level. During the week, shares again dipped below the 21-day moving average--a technical indicator of the short-term trend--around which they had been oscillating. The stock is now testing the 50-day moving average, which indicates the medium-term trend. On Friday, Rheinmetall shares initially managed to hold above this level./tih/niw/jha/
