Weekly Radar – Week 48

1. MEDLINE
2. RHEINMETALL

US EQUITIES

Medline: The Largest IPO since 2021 in the US

• On December 16, 2025, Medline went public at $29 per share, raising $6.3 billion. The IPO proved successful: despite a declining market on January 17, Medline’s stock price surged by 41%. This makes Medline the largest IPO of 2025 and one of the biggest equity raises in the United States over the past five years after Rivian, Uber, Lineage and ARM. The company could raise an additional $1.3 billion if the subscription option is exercised before December 18, 2025, assuming a subscription price of $40.
• As of December 18, 2025, Medline’s market capitalization stood at $53 billion. Back in 2021, Medline was the subject of one of the largest leveraged buyouts post 2008. Acquired for an enterprise value of $34 billion by Blackstone and Carlyle, among others, Medline carried net financial debt of $16 billion at the end of September 2025. The December 2025 capital raise therefore significantly reduced its leverage.
• Founded in 1966, Medline has alternated between public market and private ownership, but remains partly held by the founding Mills family. In 2018, Charlie Mills became Chairman of the Board, and in 2023 he handed over the CEO role to Jim Boyle, who joined Medline in 1995.
• For the past 50 years, the company has grown revenue at an average of 18% annually, without a single year of decline since at least 1997. Today, Medline is the largest distributor of surgical products, hospital equipment, and laboratory supplies. It also designs and manufactures its own products. In 2024, 84% of EBITDA came from Medline‑branded products and 16% from logistics solutions. With $20.6 billion in revenue over the last nine months, Medline operates in a global market estimated at $375 billion.
• The strength of Medline’s growth model lies in gradually replacing third‑party products (currently 50% of revenue) with its own branded offerings, which arecheaper while maintaining equivalent quality. The company aims to continue expanding both organically and through acquisitions, opening new market segments, particularly internationally. Medline does not plan to pay dividends. Jim Boyle’s aspiration is “to make Medline the Costco of healthcare.”
• Following the full capital raise, Medline’s enterprise value is expected to exceed $60 billion, with adjusted EBITDA of $3.4 billion in 2024 and net income of $1.2 billion. This implies a valuation of 18x 2024 EBITDA and 50x 2024 net income. Medline is therefore richly valued, reflecting not only its resilient, value‑creating business model and reduced debt burden, but also a degree of market enthusiasm in the early days of trading.

EUROPEAN EQUITIES

Rheinmetall, strategic refocusing on Defence

• In 2024, Rheinmetall’s automotive activities (Power Systems) still accounted for 20% of its turnover (15% in 2025e), a division that has not been spared by the crisis currently affecting the automotive sector, with an operating margin of 4.2% in 2024, well below those in Defence, ranging from 28.4% (Weapons and Ammunition) to 11.2% (Vehicle Systems). In 2025, given the strong demand in Defence, the Power Systems division will account for only 6% of the group’s orders.
• Following the announcement in April of a divestment process, the group has now taken a decisive step forward, announcing that it is now listing Power Systems as a non-core business given the advanced stage of the sale process (two candidates selected for a takeover expected in Q1 2026). This accounting reclassification has led the group to revise its annual forecasts, which are now higher as they are no longer diluted by less profitable and slower-growing assets; the group’s growth is expected to be between 30% and 35% (compared with the 35-40% previously expected for the Defence business, a difference that appears to be due to a longer delay in reopening a factory that was damaged by fire) with an operating margin of between 18.5% and 19% and a cash flow conversion rate of over 40%, certainly due to customer advances linked to the arrival of large orders. 
• The group is therefore ready to focus exclusively on the strong demand expected in the medium term in the defence sector, finally becoming a pure player and one of the major beneficiaries of upcoming European and, above all, German programs, The Bundestag’s budget committee approved more than €50 billion in new military orders this week.
• Rheinmetall’s ambition is to become a global player in the three areas of Defence: land, air and sea. Last September, the group, already a key player in armoured vehicles, ammunition and land systems, announced the acquisition of German shipbuilder NVL for an undisclosed price estimated at €1.4 billion. For Germany, which needs to invest heavily in modernising its navy, coastal defence capabilities, patrol vessels and frigates, this is a guarantee that it can count on a national champion capable of rapid production. The group will also be able to capture future European programs, with the European naval sector set to experience a decade of investment. Rheinmetall estimates that the potential additional market volume amounts to €50 billion, on top of its existing order book of €120 billion in its core business. With NVL, Rheinmetall thus becomes an integrated land and sea player, with a business model similar to that of Thales or BAE Systems. 
• The share price has fallen 28% since its peak at the end of September due to the prospects of a peace agreement between Ukraine and Russia, but is still gaining more than 150% YTD.  The €50 billion revenue target for 2030, announced in mid-November, is at the heart of the debate, with concerns about the company’s ability to increase its size almost fivefold in terms of turnover: what visibility is there on medium-term orders, what about the risks of delays in expanding industrial capacity, concerns about execution, the supply chain, etc.? Let us bear in mind that Rheinmetall has demonstrated, through the construction of its latest ammunition factory, deeper vertical integration and accelerated automation, that rapid and successful capacity expansion is possible, and this will serve as a model for other sites. Finally, the build-up of stocks of critical raw materials covering more than three years of production and its efforts to diversify its supply chain should strengthen its ability to deliver.
• In the short term, the stock will of course be dependent on developments in Russia/Ukraine, but it seems unlikely that Germany will backtrack on its Defence spending plans. Rheinmetall is the large-cap growth stock in the sector, trading at 14.76x 2027 EBITDA (compared with 11.34x for Thales and 12.08x for BAE Systems) but is expected to post growth of over 35% in 2027 (compared with <8% for Thales and >7% for BAE Systems) and significantly higher EBITDA margins (>22% compared with 17.7% and 13.8% estimated for Thales and BAE Systems).