Citi Slaps Neutral on Rheinmetall, Flags Ammo Peak Risk
Source: investing.com
- Citi starts coverage of German defense firm Rheinmetall with a neutral rating due to risks in its booming ammunition business.
- The bank sees Rheinmetall's shares as overvalued at 35x expected 2025 earnings, with sales growth slowing sharply.
- Peak ammunition production could hit by late 2025, risking a sharp drop in orders and profits.
Citi analysts kicked off coverage of Rheinmetall, Europe's top ammunition maker, with a neutral rating and a price target of 1,500 euros per share. They warn that the company's explosive growth from Ukraine war demand is nearing a peak, with ammunition output maxing out soon. This matters to investors because Rheinmetall's stock has soared over 400% in two years, but fading orders could trigger a big pullback.