(Bloomberg) - This week’s decline in Europe’s defense shares is an opportunity to add to holdings in the still-buoyant sector, according to JPMorgan Chase & Co.
Analyst David Perry made the recommendation after shares slipped following President Donald Trump’s Wednesday speech at the World Economic Forum in Davos, Switzerland. Trump said he did not want to use excessive force to take control of Greenland, which is currently owned by Denmark.
In what some analysts considered a deescalation of tensions, Trump later said a “framework” had been formed on the future of Greenland following a meeting with North Atlantic Treaty Organization Secretary General Mark Rutte.
A Goldman Sachs Group Inc. basket of the region’s defense stocks fell as much as 3.0% on Thursday, in a third-straight day of declines. One of the largest firms, Germany’s Rheinmetall AG, was down 5.6% over three sessions.
“We continue to recommend that investors buy any weakness in European defense stocks,” said Perry. “We are in the very early stages of a global defense spending upturn that could last for another decade,” he added.
Perry cited comments from Canadian Prime Minister Mark Carney, who used his address in Davos to argue that the world’s middle powers must band together to resist coercion from aggressive superpowers.
After a massive rally in the first half of 2025, military shares have been increasingly sensitive to geopolitical newsflow as high valuations leave the market on edge. Rheinmetall’s stock is priced at more than 40 times earnings expected in a year’s time, almost double the multiple seen a year ago.
Perry cited comments from Canadian Prime Minister Mark Carney, who used his address in Davos to argue that the world’s middle powers must band together to resist coercion from aggressive superpowers.
After a massive rally in the first half of 2025, military shares have been increasingly sensitive to geopolitical newsflow as high valuations leave the market on edge. Rheinmetall’s stock is priced at more than 40 times earnings expected in a year’s time, almost double the multiple seen a year ago.
By Isolde MacDonogh and Joe Easton
