Rheinmetall: UBS still believes in stock; targets 130 euros

(CercleFinance.com) - This morning UBS has confirmed its optimism on the German industrial group Rheinmetall, maintaining its “Buy” rating on the stock.


The broker also maintains its 12-month target price of 130 euros, which suggests upside potential of over 40%.

"We think the market finds it easier to quantify the near-term auto risk than to appreciate the medium-term defence upside," the broker says in its report on the stock.

Indeed, analysts recognise that it is not easy to "convert" the group's order backlog into future sales. " That said, we think the value of its recent orders and likely project wins in the next two years exceeds the value of bigger orders phasing out until 2020 by a factor of 2.3x," UBS continues. Clearly, the market appears to be underestimating the potential of the group's Defence division.

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