FRANKFURT (dpa-AFX) - Profit-taking caused the share prices of German defense companies to fall on Tuesday in a somewhat weaker to barely changed overall market. Rheinmetall in particular stood out at times with a double-digit percentage drop, which initially interrupted the share price rally.

At times, Rheinmetall shares also slipped back below the EUR 500 mark, after reaching another record high of EUR 571.80 in early trading and thus not being far short of the EUR 574 mark, which would mean a doubling of the share price in 2024. In heavy trading, Rheinmetall shares then climbed back above the round mark with losses of 8.2 percent to around 515 euros. Some market participants apparently sensed an entry opportunity in the setback.

Analyst Victor Allard from Goldman Sachs remains optimistic for Rheinmetall anyway and his estimates are above the market forecasts. The expert expects a record year for the Düsseldorf-based company's orders and raised his price target for the DAX stock from 381 to 606 euros in a study on the European defense supercycle.

However, in view of the increase in government defense budgets, European defense shares are currently trading at historically high valuations, he wrote, and ultimately sees more downside than upside potential with a view to 2025.

Allard believes that the valuation of newcomer Renk, for example, is now somewhat overstretched. The shares, which had already paid tribute to their record rally last Friday with a discount of over twelve percent, fell again on Tuesday after a temporary recovery at the start of the week. They recently lost 6.7 percent. The shares of Hensoldt are also currently unable to match their record high and were very weak on Tuesday, falling by 4.6 percent./ajx/bek/nas