Rentokil Initial PLC (LSE:RTO), a British pest control business, could see growth in its share price going forward after full-year results boosted experts’ earnings per share (EPS) forecasts.
The FTSE 100 constituent reported a 25% growth in revenue last year, with profits dropping by under 10% - largely due to the acquisition of US-based Terminix.
The Crawley-based firm’s positive performance caused a boost to the Royal Bank of Canada (TSX:RY)'s EPS forecast for 2024 and 2025 by 2% and 6% respectively.
These changes alongside an increase in synergy targets from the merger and clear guidance for the future have led to an upgrade in its target price by analysts at the Canadian bank.
RBC raised its target price to 670p, around a 20% upside to the current share price of around 550p.
The investment bank was also impressed by how Terminix's chief executive, Brett Ponton offered a “helpful” insight into the route to growing the business 1.5 times greater than the industry average.
RBC said: “This provides confidence that management is on top of the business and well placed to oversee the integration of TMX, all while handling the growth of the business.”
The 98-year-old business had previously pleased investors after its dividend was hiked to 1.35% following full-year results.
Such increases are predicted to continue, according to the North American bank, with dividend yields expected to reach 2% by its 2025 year-end.
Rentokil shares have performed well in the year-to-date despite the recent macro headwinds, with the stock up more than 7% in 2023.