Rational slips after Baader Helvea cuts on valuation

Rational AG

08/05/2023 07:27

** Shares in Rational  RAAG.DE  are down 2.5% in early
Frankfurt trade after Baader Helvea cut the German industrial
kitchen equipment maker to "reduce" from "add", citing high
valuation
    ** Despite faster-than-expected business recovery and
favourable medium-to-long-term growth and earnings prospects,
the brokerage sees Rational's valuation as high, considering the
current interest environment
    ** It raises its target price by 7% to 635 euros
    ** "Rational's long-term growth prospects remain favorable,
offering potential for at least high single-digit annual unit
growth for the next 5-10 years," - Baader
    ** Triggers for growth are, among others, an accelerated
switch to state-of-the-art cooking technologies, increasing
labor, energy- and occupancy costs, and the expected
consolidation among competitors, Baader says
    ** It adds it is optimistic that Rational will be able to
sustainably achieve EBIT margins of slightly more than 25% again
in the medium term
    ** Among the 14 analysts that cover Rational, three rate the
stock "strong buy" or "buy," eight "hold" and three analysts
rate it "sell" 

 (Reporting by Paolo Laudani)
 ((Paolo.laudani@thomsonreuters.com))