Rheinmetall shares plunge on second profit warning and cashflow issues

Rheinmetall shares fell over 18% to around €850, halving from their record high, following a second profit warning in months. One report noted a 15% decline, while another cited an 18% drop. The company lowered its 2026 revenue forecast to €13.2 billion from €13.7-14.2 billion and cut its operating margin target to 18.5% from 19%. The goal to convert over 40% of operating profit into cash was scrapped, with only a positive operating cashflow promised; the first nine months showed a cashflow deficit of €1.7 billion. Delays in the Boxer transport vehicle contract, now expected in Q1 2027, and artillery ammunition deliveries contributed to the issues. Despite this, revenue rose 38% to €8.4 billion and operating profit up 68% to €1.3 billion in the first nine months. The order book stands at €78 billion. Analysts maintain buy ratings: Bernstein (Outperform, €1,200 target), Morgan Stanley (Overweight, €1,750 target), and Jefferies (Buy, €1,350 target). The Bloomberg consensus is €1,520, implying 78% upside from the current price. CEO Armin Pappberger must address the €50 billion 2030 revenue target at the end-of-November capital markets day. Analysts express concern over Rheinmetall's credibility and reliance on large orders, describing the development as negative, but maintain buy recommendations, betting on the company's ability to convert its massive order book into timely revenue and cash flow.