The City broker has cut its rating for the FTSE 100-listed firm to ‘hold’ from ‘add’ with an unchanged target price of 315p.
READ: Rentokil Initial trades well in first quarter despite delayed start to the spring pest season in the US
In late morning trading on Thursday, Rentokil shares were changing hands at 319.1p each, down 0.2% on the previous session’s close.
In a note to clients, Numis’ analysts noted that the CMD reiterated “the long-term structural growth attractions of the equity story, and the value compounding nature of the Group's strategy.”
They said they still view the stock as a core long-term holding due to the growth drivers and relative lack of cyclicality.
However, with the shares having run hard since the publication of the analysts' last note on the group in March, to now trade on 25.4x 2018 estimates price earnings, they downgrade on valuation grounds.
The analysts concluded: “Given lower organic growth in 1Q18 due to weather disruption and a tough comp in 2Q18, we believe there may be a more attractive entry point in the coming months.”