On Thursday, Goldman Sachs adjusted its price target on shares of Rheinmetall AG (RHM:GR) (OTC: RNMBY) shares, increasing it to €635.00 from the previous €606.00. The firm sustained its Buy rating on the stock.
According to the analyst at Goldman Sachs, Rheinmetall presents one of the strongest earnings growth profiles among the companies featured on their Multis screen. The forecast is for earnings per share (EPS) to climb to approximately €39 by 2026, up from around €11 in 2022.
The analyst highlighted that Rheinmetall is currently trading at a price-to-earnings (P/E) ratio of 13.1 times and offers a free cash flow (FCF) yield of 4.9% based on the firm's 2026 estimates. This compares favorably to the average P/E ratio of 14.7 times and FCF yield of 4.6% for the aerospace and defense (A&D) industry peers.
The updated price target of €635 implies an approximate 20% upside from current levels. This potential for growth is grounded in the company's robust earnings expansion outlook, which is expected to significantly outpace that of its industry counterparts over the next few years.
Goldman Sachs' positive stance on Rheinmetall is supported by the anticipated rise in earnings, which serves as a key driver for the increased price target. The firm's analysis suggests that investors could witness substantial value growth in the stock based on the projected earnings trajectory.
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