STOCKS NEWS EUROPE-Rational up as company shrinks costs

Shares in Rational (RAAG.DE) rise 2.5 percent, making them the fourth strongest performers among Frankfurt's midcap stocks .MDAXI, as the internet tyre retailer reports strong third-quarter figures which are driven by cost savings. "Sales and distribution costs were cut by 12 percent within the first 9 months (of 2009), administrative costs were reduced by 6 percent and R&D costs by 4 percent. Thus not only a decreased raw material prices, which we regard as not sustainable, helped to boost the EBIT margin to roughly 32 percent in this quarter," says WestLB analyst Michael Gorny.

Gorny says that it is likely that consensus estimates will be raised and the brokerage raises its stance to "add" from "neutral."

DZ Bank analyst Markus Turnwald says in a note to clients: "Today's figures are massively better than we had expected. Given the strict cost management, and the return of top-line growth in Asia and Germany we believe that we will see earnings record already in 2010."

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