Over 50% upside potential for Almonty! Crash at Steyr Motors! Rheinmetall also needs tungsten!

Almonty Industries: Analysts see more than 50% upside potential

While Almonty Industries' share price is bottoming out after the correction, the next analyst sees significantly higher prices and recommends buying the shares. Following Oppenheimer (price target CAD 12), the experts at Cantor Fitzgerald are now recommending buying this tungsten gem. The analysts see the fair value of the stock at USD 10 (CAD 14). Yesterday, Almonty shares were trading just above EUR 6. From Cantor Fitzgerald's perspective, Almonty is developing into the Western heavyweight in the strategic metal tungsten.

The basis for this optimism is Almonty's rapidly increasing production. Based on the current output of around 58,000 MTUs of tungsten oxide (WO₃) per year from the Panasqueira mine in Portugal, production is expected to rise to over 300,000 MTUs in 2026 with the commissioning of the Sangdong mine in Korea, and to reach around 640,000 MTUs in 2027, including expansion projects. From 2028 onwards, Cantor sees potential for nearly 800,000 MTUs per year. This clearly positions Almonty well on its way to becoming the largest non-Chinese supplier of tungsten concentrate for Western industries.

A key component of this growth story is the now-completed acquisition of the Gentung Browns Lake project in the US state of Montana. The deposit has a defined resource of approximately 7.5 million tons of rock with about 0.32% WO₃ and, according to Cantor, is suitable for relatively low-cost underground mining due to its geometry. Almonty aims to have the site operational by the second half of 2026. Rapid and cost-effective commissioning is to be made possible by utilizing existing infrastructure from Spain. The target annual capacity of the site is 140,000 MTUs. The project is particularly significant due to its location in the US. Cantor sees good opportunities for Almonty to benefit from government funding, off-take agreements, or even direct participation under the US Defense Production Act.

The price target is based on a combination of a 1.5x sum-of-the-parts NAV and 15x expected EBITDA in 2027, with analysts assuming a long-term tungsten price of USD 450 per MTU. The spot price is currently above USD 700. Cantor expects a sharp jump in earnings as early as 2026: with all-in sustaining costs falling from around USD 329 to USD 206 per MTU, Almonty could already achieve EBITDA of just under CAD 94 million. By 2027, this figure could exceed CAD 160 million.

https://youtu.be/O-T9OTg8vLU?si=qHDRtCCEUWX9f6mP

Rheinmetall: On board with the new Leopard 2

Rheinmetall is also likely to become an indirect customer of Almonty in the future. After all, Germany's largest defense contractor probably needs tungsten not only for ammunition for the Leopard 2 tank.

At the rollout of the new Leopard 2 A8 battle tank and the modernized Panzerhaubitze 2000 A4 self-propelled howitzer in Munich, Defense Minister Boris Pistorius made it clear that, in view of the security situation in Europe, the German Armed Forces are entering a phase of accelerated growth. The Leopard 2 A8 is receiving a clear upgrade in capabilities with an advanced protection system and improvements to the fire control system, operation, and engine. At the same time, the Panzerhaubitze 2000 A4 is being procured to replace systems transferred to Ukraine.

Several NATO partners – including Lithuania, the Netherlands, Czechia, and Norway – have already ordered the Leopard 2 A8. Rheinmetall is supplying armament and ammunition for the system, among other things. Long-term demand ensures sales security. At the same time, Pistorius increased the pressure on all parties involved to significantly accelerate the procurement and production processes. He called for more resilient supply chains, shorter lead times, and scalable capacities that can be ramped up quickly when needed – and spoke of a new quality of cooperation between the German Armed Forces, partner countries, and industry.

After temporarily exceeding the EUR 2,000 mark, Rheinmetall shares have corrected and are currently trading at around EUR 1,600. On Wednesday, DZ Bank raised its target price for the DAX share from EUR 2,240 to EUR 2,385. Analysts expect the order backlog to reach around EUR 120 billion by mid-2026, and consensus forecasts are expected to be raised.

Steyr Motors: Share price takes a beating

Steyr Motors' share price took a significant beating yesterday. The stock of the supplier of special engines for military and civilian applications lost around 20% of its value on Thursday. Over the past four weeks, shareholders have had to cope with a loss of around 35%.

The reason for yesterday's price slump is clear. Major shareholder Mutares has sold its remaining 23% stake in Steyr in its entirety. The total of 1,213,206 shares were placed with international institutional investors as part of a private placement. This increases the free float to 80%.

Steyr CEO Julian Cassutti attempted to highlight the positive aspects of the transaction: "The successful placement of Mutares' share package is a significant milestone for our company. The strong interest shown by the new international institutional investors demonstrates that Steyr Motors AG's operational development, our strategic positioning as a leading supplier of drive solutions for the most demanding requirements in the civil and military sectors, and our medium- and long-term prospects are receiving an extremely positive response. With our expanded investor base and a strong anchor shareholder, B&C Holding, at our side, we are ideally positioned to enter the next phase of our international growth." However, the share price reaction showed that shareholders were caught off guard and did not welcome the move.

The 20% slide in Steyr's share price is severe. The loss of confidence appears to be significant. In contrast, analysts have a lot of confidence in Almonty. The tungsten group seems to be on the right track. The share price should also benefit from this again. Rheinmetall remains a core investment in the defense sector. However, order intake has recently been disappointing.