AZTR receives NYSE delisting warning over equity requirement
Investing.com -- Shares of Rational AG (ETR:RAAG) rose 7% Thursday after the company reported stronger-than-expected underlying business developments that are helping to offset headwinds from US tariffs and foreign exchange effects.
Rational said its organic growth is more positive than originally expected, and is therefore, to a large extent at least, offsetting the negative tariff and FX impacts.
The company has not yet decided on potential US price increases to mitigate tariffs. A decision is expected to be announced with the Q3 results on 6 November, with potential implementation from the start of 2026.
Rational noted that “many of its competitors have already announced price increases for the US market.”
Group revenue continues to track in line with full-year guidance for “mid-single-digit” growth, which includes the negative FX effects.
The company attributed performance to “the continued better-than-expected performance in Europe overall YTD… and in North America (excluding FX effects), plus the investments being made in increasing sales capacity.” Sales in Asia remained soft.
Total US tariffs are now expected to reach around 17%, comprising a 15% base rate plus a further 200 basis points due to an additional steel component tariff.
Rational said this implies an H2 EBIT impact of “c. €10-11m,” up from a prior estimate of €9 million.
The potential effect on gross margin, estimated at about 50 basis points, is expected to be offset by lower supply and logistics costs and continued stronger organic growth.
Assuming the positive organic trend continues, Rational said the guidance range for full-year 2025 EBIT margin of 25-26% would likely remain intact, despite the tariff and FX headwinds.
Separately, Barclays upgraded Rational to “overweight,” noting the stock has “de-rated enough…with more constructive view from calls with distributor/competitor,”
The brokerage said Rational’s current valuation, “at a 10-year low and back to pre-2015 levels after a 12-month long derating, has de-rated too deeply considering its still-sector-leading quality, and is reflecting an unlikely sales/margin decline scenario.”
“Our discussions with US distributors/competitors also allow us to be more constructive on RAA’s performance in the US, with RAA likely gaining further share, despite persisting near term risks like tariffs (on demand/margin) but we think likely already in the price,” the brokerage said.
Barclays also cited long-term growth potential, noting that products such as the iHexagon combi oven “could be a game changer… producing food with great speed with quality, and is the biggest innovation in the combi oven space in the last 10 years.”
The brokerage maintained a price target of €816, up from €805, based on a 26x 2026E EV/adjusted EBITA multiple, and projected a 2-3% uplift in 2026-27 sales due to market share gains and potential pricing adjustments.
Barclays noted that tariffs and FX remain key headwinds, and some price increases may be required to offset new US tariffs, potentially affecting margins.
The brokerage also highlighted that Rational’s Q3 FY25 EBIT margin is assumed at 24.9% versus 25.1% consensus, with reported sales growth projected around 4.5% for 3Q25, compared with 6.2% Bloomberg consensus.