logo-loader

Brokers start coverage with differing opinions on pest control to hygiene services firm Rentokil Initial

Published: 11:06 04 Dec 2017 GMT

Rentokil employee
But fellow US bank Jefferies International started coverage with a ‘hold’ rating and 335p price target

Brokers had some differing opinions today on blue chip pest control to hygiene services firm Rentokil Initial PLC (LON:RTO), although the more positive view held sway. 

Analysts at Goldman Sachs have initiated coverage on Rentokil with a ‘buy’ rating and a 12-month price target of 400p, saying they see a 16-24% equity IRR (internal rate of return) over the next four years.

READ: Rentokil Initial reports solid growth in third-quarter revenue boosted by its pest control unit

In a note to clients, the US banking giant’s analysts said: “While Rentokil has rerated in recent years, we believe this is justified by its improved mix (more high-growth pest control business) and successful M&A track record.”

But fellow US bank Jefferies International is less bullish, with its analysts starting coverage of the FTSE 100 listed firm with a ‘hold’ rating and 335p price target.

They noted: “Rentokil's stock has rallied c. 415% since 2012; however, we believe that a tighter balance sheet, rising M&A valuations, and opaque margin progression warrant a pause in the rally.”

The Jefferies analysts added: “We forecast Rentokil will grow revenues within its 5%–8% guidance range in FY18, with no apparent catalyst for multiple expansion.”

In late morning trading, Goldman’s view seemed to hold sway, with Rentokil shares up 1.4%, or 4.4p at 319.5p.

Oriole Resources outlines 2023 achievements and future exploration plans

Oriole Resources PLC (AIM:ORR) CEO Tim Livesey and chief financial officer Bob Smeeton join Proactive's Stephen Gunnion with details of the company's 2023 financial and operational performance. Livesey highlighted successful exploration programs in Cameroon, at the Bibemi and Mbe projects,...

2 hours, 39 minutes ago