EU Defense stock is up 15% in a week; Here’s why

⚈ Company expects €300B in orders and reported strong sales and profit growth ⚈ Defense sector rallies broadly, with Rheinmetall outperforming peers like Leonardo and Dassault Much like during La Belle Époque , Europe has managed to keep the majority of its wars off the continent in the 21st century. However, the recent decision from the EU leadership has signalled concerns this might change, sending one German-South African defense stock soaring. Rheinmetall AG (ETR: RHM), the fifth-largest arms manufacturer on the continent, has seen significant equity market advancements in most time frames. Though the last 24 hours saw a downward correction of 2.40%, RHM stock remains 15.37% in the green in the weekly chart at its press time price of €1,588 (~$1,797). Why RHM stock is soaring Although multiple factors contributed to Rheinmetall’s rally, the latest and arguably the most impactful has been the European Union’s plan to spend €800 billion (~$905 billion) to remilitarize the continent, announced due to the combined fears of Russian aggression and American exit from joint security arrangements. The direct impact on the German-South African company can be seen from its CEO’s April comments that Rheinmetall sees the potential orders for its equipment reaching €300 billion (~$340 billion). Such an upsurge has helped push the arms manufacturer toward further gains after it recorded a remarkable 1,395% rally in RHM shares since Russia’s invasion of Ukraine started. The general strength of the business amidst the current developments was also evident in Rheinmetall’s latest preliminary earnings report, published on April 28. The arms manufacturer revealed a 46% rise in sales to €2.3 billion (~$2.63 billion) and a 49% rise in operating profit. Prominent analyst firms have also noted Rheinmetall’s recent success and potential for future growth. On May 2, Jefferies confirmed its previous ‘buy’ rating for RHM stock, and on May 5, UBS assigned the same recommendation while also setting the price target at €1,840 (~$2,084)—15.87% above the press time value. Lastly, the overall bullish picture was also reinforced by the recent expansion of the missile and rocket partnership between the German-South African company and the American military giant Lockheed-Martin (NYSE: LMT). Interestingly, the fortunes of Rheinmetall simultaneously demonstrate the power of brand recognition and national reputation. Other major European arms manufacturers have also rallied with Leonardo SpA (BIT: LDO) surging 84.57% to €48.10 (~$54.43) in 2025, and France’s Dassault Aviation SA (EPA: AM) rocketing 64.68% to €322.60 (~$365.07) year-to-date (YTD). However, the rise has not been as sharp as for Rheinmetall, which is up 165.07% within the same time frame, nor universal. Airbus (EPA: AIR), for example, despite also being a major defense company, is down 3.21% since the year started and is changing hands at €155 (~$175.41). Featured image via Shutterstock Source: https://finbold.com/eu-defense-stock-is-up-15-in-a-week-heres-why/