Sell Rheinmetall Shares? Over 20% Gains in One Week! Buy Rating for OHB! Bayer Partner MustGrow Begins Re-Rating

MustGrow Begins Its Re-Rating

Sometimes it takes a little longer for an interesting investment story to gain traction on the stock market. In the case of MustGrow Biologics, that breakthrough may have finally come last week, when the shares surged by more than 20%. According to analysts at GBC Research, there are good reasons to believe this could be just the beginning. They estimate the fair value of MustGrow shares at EUR 1.66, compared with a current share price of around EUR 0.22.

The potential for a significant re-rating of the shares is driven by the strong growth that analysts expect from MustGrow. For 2027, GBC analysts forecast a surge in revenue to CAD 14.05 million, up from an expected CAD 4.50 million in 2026. EBITDA is expected to improve to a negative CAD 1.08 million, while the company is still projected to post a net loss of CAD 1.45 million, or CAD 0.02 per share. The breakthrough is expected to come in 2028, when profitability is forecast to turn positive. GBC anticipates a jump in revenue to CAD 31.56 million, alongside positive EBITDA of CAD 8.46 million. Bottom line: GBC forecasts net income of CAD 8.07 million, equivalent to earnings of CAD 0.11 per share. The shares are currently trading at CAD 0.38.

But what exactly does MustGrow do? The Canadian AgTech company develops environmentally friendly active ingredients derived from mustard seeds for applications in crop protection, biofertility, and regenerative agriculture. Its products are marketed under the names TerraMG™ and TerraSante™. The pre-registered biopesticide candidate TerraMG™ is based on mustard-derived bioactive compounds and is intended for use against soil-borne fungi and in post-harvest applications, among other things. TerraSante™, the biological soil fertility product, is designed to improve soil quality and microbiome activity. MustGrow follows an asset-light business model, largely avoiding the need to build its own manufacturing and distribution infrastructure. Similar to chip designers such as Nvidia in the semiconductor industry, MustGrow focuses on technology, product development, and intellectual property, while manufacturing is handled through external partners.

TerraSante™ is already approved in several US states and is being commercially marketed. A key component of MustGrow Biologics' growth strategy is its partnership with Bayer for TerraMG™. Through this collaboration, MustGrow gains access to markets in Europe, the Middle East, and Africa (EMEA) without having to establish its own sales structures there. In addition, the German conglomerate covers costs leading up to market launch, such as those associated with regulatory approval. The cooperation with Bayer may also trigger milestone payments.

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Sell Rheinmetall Shares?

Despite strong half-year operating results, analysts at mwb research are becoming increasingly skeptical about Rheinmetall. In the second quarter, revenue rose by 69% to EUR 3.29 billion, while operating profit rose by 115% to EUR 562 million. The operating margin of 17.1% also exceeded market expectations. The order backlog remains at a high level of EUR 80.5 billion and, in the analysts' view, offers good visibility for the coming years. Nevertheless, the strong earnings figures were not enough to convince mwb. Experts view the weak cash flow particularly critically. In the first half of the year, operating free cash flow stood at minus EUR 1.62 billion. To still achieve the targeted cash conversion rate of more than 40% for 2026, analysts believe Rheinmetall would need to generate approximately EUR 2.7 billion in operating free cash flow in the second half of the year.

The revised forecast is causing further disillusionment. Due to the cancellation of the F126 frigate project, Rheinmetall reduced its revenue forecast for 2026 by EUR 300 million to between EUR 13.7 billion and EUR 14.2 billion. Even more decisive for mwb, however, is the significant reduction in planned investments. Instead of the 16% of revenue mentioned at the Capital Markets Day, investments are now expected to reach only 8% to 9%. According to analysts' estimates, it is only this halving that makes the cash flow target achievable at all. At the same time, the order volume target for the end of 2026 was scaled back from around EUR 135 billion to more than EUR 100 billion. mwb is also disappointed that Rheinmetall did not raise its margin forecast despite the cancellation of the lower-margin F126 project.

From the analysts' perspective, this increasingly calls into question the ambitious long-term growth story. While execution of the existing order backlog is proceeding well and the coming years are comparatively well secured, the lower investments may simply have been deferred to subsequent years. mwb is therefore raising its Capex assumptions for 2027 and 2028 while simultaneously reducing its long-term revenue estimates due to changes in Germany's procurement priorities. For 2028, they expect Rheinmetall to generate revenue of EUR 23.965 billion. This will make the ambitious growth scenario through 2030, in particular, more difficult to achieve. The experts are lowering the price target from EUR 1,150 to EUR 1,050. At the same time, the analysts are downgrading Rheinmetall shares from "Hold" to "Sell."

OHB: Analysts See Potential for Rising Share Prices

Following a sharp rise in its share price from January through May of this year, OHB shares have recently undergone a significant correction. The stock plummeted from around EUR 670 to as low as EUR 229. However, its year-to-date performance still stands at a respectable 89%. NuWays has recently raised hopes for rising share prices once again. From the analysts' perspective, Germany's space industry hope is on track operationally following the second quarter and is also well-positioned for an upcoming wave of larger orders. Although revenue grew by only 9% in Q2, down from 15% in the first quarter, the full-year forecast was confirmed. This suggests that growth should accelerate again in the second half of the year.

According to NuWays, the upcoming order cycle is now crucial to the investment story. IRIS is particularly important, with OHB slated to be the key industrial partner for the MEO portion of the European satellite constellation. Signing a contract in the second half of the year would provide long-term visibility extending toward 2030. Added to this are potential ESA contracts for Sentinel, ClearSpace-1, and OpSTAR. Starting in 2027, the potential is likely to increase further due to the significant rise in European and German space and defense budgets. SATCOMBw4, with a volume of approximately EUR 10 billion, is highlighted. NuWays estimates OHB's share there to be between 30% and 50%. The analysts therefore confirm their "Buy" recommendation with a price target of EUR 340.

For the current fiscal year 2026, analysts expect OHB to report total revenue of EUR 1.44 billion and adjusted EBITDA of EUR 158.1 million. Earnings per share are expected to be EUR 2.73. For 2028, they forecast total revenue of EUR 2.41 billion. Adjusted EBITDA is expected to be EUR 307.7 million, and earnings per share are expected to be EUR 7.50.

There are good reasons to believe that the surge in MustGrow's share price was just the beginning of a larger re-rating of the stock. In any case, analysts expect strong revenue and earnings growth in the coming years. Against this backdrop, the share appears undervalued. Analysts see major question marks regarding Rheinmetall's longer-term revenue and earnings growth. However, significantly more analysts recommend buying the shares. Investors looking to invest in a pure-play company in the European space sector can hardly ignore OHB. However, the stock is anything but cheap.