UBS has significantly reduced its price target for Rheinmetall, but maintains its buy recommendation. Analyst Sven Weier still sees the arms company as clearly undervalued.
The major Swiss bank UBS has lowered the price target for Rheinmetall from 2,200 to 1,600 euros and left the rating at “Buy”. When asked whether Rheinmetall was “more like Kodak or more like Netflix,” he would answer with “something in between,” Sven Weier wrote on Wednesday evening. Investors were now increasingly concerned about the Düsseldorf-based company’s position in a future arms market given its focus on ammunition and vehicles. Weier sees more and more defense spending flowing into new technologies in the longer term, but Rheinmetall could still benefit from hybrid solutions in the meantime. However, this is no longer factored into the price at all in the significantly corrected price level. The price does not take into account growth in the ammunition business beyond this year and has also priced out the Boxer transporter.
The Rheinmetall share ultimately lost 1.96 percent to 1,209.40 euros in XETRA trading. Other defense stocks also showed movement on Thursday: HENSOLDT gained 0.34 percent to 88.10 euros, RENK also fell 0.23 percent to 47.70 euros.
ZURICH (dpa-AFX Broker)
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