After the significant price losses in the German defense sector, the US bank JPMorgan has identified attractive entry opportunities.
• JPMorgan analyst David Perry confirms positive rating for leading German arms stocks
• Possible increase in the German defense budget for 2027 by 21 percent as a price driver
• Market concerns about ceasefires and new drone doctrines are considered exaggerated
Analysts’ opinion: buying opportunity after a significant sell-off
The US investment bank JPMorgan has subjected the local defense stocks to a detailed reassessment. In a current industry study, analyst David Perry confirmed his “Overweight” rating for the securities of Rheinmetall and the transmission manufacturer RENK on Wednesday morning. For the sensor specialist HENSOLDT, however, the analyst team retained the “neutral” vote. The background to this assessment is the significant price correction that the industry has undergone since October 2025 and which, according to Perry, now offers a technically and fundamentally attractive constellation for investors.
In his comments to the bank’s customers, David Perry emphasized, according to dpa-Analyser, that the current concerns of market participants were valid, but their magnitude was overstated. In particular, fears about a potential ceasefire in the Ukraine war and the associated imponderables for order books have recently weighed on prices. There are also concerns about a fundamental change in military doctrine due to the increased use of drones, which could devalue classic land systems. However, JPMorgan sees this as more of an evolution than a disruption of existing business models.
Fiscal stimulus: Defense budget 2027 as a potential catalyst
A key factor in the US bank’s optimistic stance is its expectations of German financial policy. David Perry predicts the announcement of a German defense budget for 2027 this Wednesday, which is expected to show an increase of around 21 percent compared to the previous year. This significant increase in defense spending would massively strengthen long-term planning security for companies like Rheinmetall. The analyst believes that this fiscal stimulus will effectively counter skepticism about declining demand for conventional defense technology.
In addition to the budget expansion, the study pointed to the ongoing implementation risks of large projects, which have already been priced in to a large extent by the market. Since the Bundeswehr and other NATO partners continue to rely on heavy weapons systems and armored vehicles, the fundamental demand curve remains steep despite modern warfare technologies. The bank set the price target for Rheinmetall shares at 2,130 euros, while a target of 75 euros is estimated for RENK and a fair value of 85 euros for HENSOLDT.
Current price reaction on the German trading floor
In early trading on Wednesday, the affected stocks were already well supported in response to the study and were in some cases well above the zero line. The Rheinmetall share temporarily improved by 0.92 percent to 1,355.60 euros via XETRA. RENK shares also increased by 0.23 percent and were most recently at 53.38 euros. HENSOLDT is also in positive territory with an increase of 1.54 percent at 75.22 euros, and thus benefits more from the industry mood than the US bank’s top picks.
Conclusion for investors
JPMorgan’s recent analysis shows that the drastic revaluation of the defense sector may have marked a downward exaggeration. If the federal government actually confirms the forecast budget increase to this extent, this should underpin the fundamental story of the industry. Investors could therefore see the current weak phase as an opportunity, with stocks with high pricing power and full order books in particular likely to have an advantage. However, investors should continue to closely monitor geopolitical developments and the volatility that could be triggered by reports of peace negotiations.
Alexandra Hesse, Claudia Stephan, Evelyn Schmal, editorial team finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
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