Background and Justification
The US bank JPMorgan recently upgraded the shares of the German tank transmission manufacturer Renk from “Neutral” to “Overweight” and doubled the price target from 35 to 70 Euros. This decision reflects the optimistic revenue outlook for the company, particularly in the context of the ongoing arms boom.
- Revenue Outlook: JPMorgan expects Renk to grow by an average of 18 percent per year by 2030, driven by strong demand in the defense sector.
- Acquisitions as Growth Drivers: Future acquisitions are believed to further promote revenue growth.
- Valuation Compared: The increased price target also reflects the heightened valuation of other German defense companies such as Rheinmetall and Hensoldt.
Current Market Situation and Technical Analysis
Renk reached an all-time high of around 60 Euros in February. However, technical indicators suggest a possible trend reversal.
- Risks and Supports: The stock is short-term overbought, making a pullback possible. Support areas are at around 46.50 Euros.
Financial Performance of Renk
In the first quarter of 2025, Renk increased its revenue by 15 percent and raised its adjusted EBIT by 38 percent. For the full year, an adjusted EBIT between 210 and 235 million Euros is expected. The order intake has more than doubled, underscoring strong demand in the defense sector.
Overall, the upgrade by JPMorgan could be a positive signal for investors, although technical market signals and the general market situation should also be considered.