FRANKFURT, March 13 (Reuters) - Rheinmetall, Europe's leading ammunition manufacturer, has surpassed Volkswagen, the top carmaker in Europe, in terms of market value. This shift indicates a significant increase in investor interest in defense stocks.
At 0848 GMT, Rheinmetall's market capitalization reached approximately 56.2 billion euros ($61.1 billion), outpacing Volkswagen's 54.7 billion euros.
The surge in defense stock prices across Europe in recent weeks is driven by heightened military spending efforts in response to the U.S. urging European governments to bolster their defense budgets.
Benefitting from this momentum, Rheinmetall's shares have more than doubled since the start of the year and increased over twelve-fold since Russia invaded Ukraine in February 2022.
Jefferies, on Thursday, initiated coverage on European defense stocks, rating Rheinmetall as a "buy" and identifying the company as its top choice.
"We have witnessed a notable shift in Europe regarding defense expenditures," the brokerage noted. "This has been spurred by the threat of the U.S. withdrawing support for Ukraine in the current conflict and concerns over Europe's security given the potential for a clash with Russia."
($1 = 0.9195 euros)