Component Shortages Damp Rational’s Recovery; Guidance Is in Line With Our Expectations

Shortages of electronic components are extending lead times for narrow-moat Rational’s multifunctional cooking appliances, delaying its recovery despite a record number of new orders. Full-year revenue growth of 20% remains 7.5% below 2019 levels. Having managed to largely meet precoronavirus revenue in the second and third quarter, sales fell sequentially in the final quarter due to component shortages, which have persisted in the first couple of months in 2022. As such, Rational’s order backlog at year-end stands at EUR 300 million and has grown in 2022 as shortages persisted. Rational’s order backlog represents roughly four to five months of revenue compared with more typical levels of one month, which will prolong the duration of its recovery. Full-year revenue guidance is between 10% and 15%, which is directly in line with our forecasts of 12.5% growth. We reiterate our EUR 540 fair value estimate and view shares as slightly rich.