Shares of German arms maker and engineering firm Rheinmetall attracted investors in droves on Monday after being included in the DAX index of 40 leading companies on the Frankfurt Stock Exchange.
At the end of the first day of trading in the DAX index, Rheinmetall company shares topped the German benchmark index, with a price increase of 5.4%, to 249.90 Euros ($267.95).
The boost the arms company received in the DAX led to new expectations and buy recommendations from analysts.
Analyst Holger Schmidt, of DZ Bank, said the growing demand for military equipment as well as rising defense spending in Germany and other NATO countries hold attractive potential in the medium term for the company.
Schmidt sees room for improvement in Rheinmetall’s business results once the planned acquisition of Spanish ammunition manufacturer Expel Systems is approved.
Meanwhile, analyst David Perry of the US JP Morgan bank raised his price target for Rheinmetall from 265 Euros to 310 Euros.
Perry said Rheinmetall is likely to be the main beneficiary of large munitions shipments to Ukraine.
The company’s entry into the DAX index should also give its share price a boost, as it will make the stock more interesting to some investors again, and with a price jump of about 32% this year, Rheinmetall shares are by far the best DAX shares for 2023.
The company manufactures the Leopard-2 tank gun, a tank that is in service with several European armies and is in the process of being delivered to Ukraine.
It also manufactures the Panzerhause 2000, a long-range gun also used by the Ukrainian military.
The company expects rapid growth in 2023, with European countries boosting their military spending in response to the invasion.
“We want to participate with our products in the growing budgets of military capabilities,” CEO Armin Babberger said from Dusseldorf, where the company is headquartered, last Thursday.
The average number of employees at Rheinmetall was 24,800 in 2022, up about 1,100 from the previous year, and the plans to increase the number by 3,000 in 2023.