FRANKFURT (dpa-AFX) - German defense stocks rebounded in early trading on Monday from their recent setbacks, with Renk taking the lead following a buy recommendation from Citigroup.
Shares of the tank transmission manufacturer jumped more than 5 percent at the top of the MDax index. After reaching a record high of over EUR90 in early October, the stock had lost nearly half its value by December 1, dropping to just above EUR47. Most recently, pressure came from the new U.S. initiative to end the war in Ukraine.
However, military experts and analysts have repeatedly emphasized that the outcome of the Ukraine war would do little to change the overall threat landscape and, consequently, the demand for defense equipment. Charles Armitage of Citigroup echoed this view, expecting defense spending to continue rising regardless of how the Ukraine conflict is resolved. Maintaining his price target of EUR65, he now recommends buying the shares after their recent weak performance.
Rheinmetall shares had lost 30 percent since their record high of EUR2,008, while Hensoldt had fallen up to 45 percent from its peak of nearly EUR118. Both stocks are also recovering on Monday.
Despite the pullbacks from their highs, defense stocks remain significantly up since the end of 2024. Rheinmetall shares have gained 155 percent so far this year, after already posting substantial increases from 2022 to 2024./ag/zb
