Deutsche Bank has, “with regret”, knocked Rentokil Initial PLC (LON:RTO) down to ‘Neutral’ from ‘Buy’ amid concerns consensus profit expectations for 2018 are too high.
In a note to clients, analysts at the German bank said the FTSE 100 pest control company was a “great equity story, but not pricing in risk to consensus.”
READ: Jefferies upgrades Rentokil after share price fall
“Rentokil is one of our favourite stocks in the sector - resilient growth dynamic, heaps of dry powder on the balance sheet, margin upside in key markets and a strong management team with impressive deal experience.
“However, we see consensus profit expectations as too high for 2018, at least prior to more M&A announced. More M&A might very well be announced at the Q1 results on April 19th and/or in the near future, but we do not think that the shares are pricing in potentially mid-single digit downgrades”, they added.
Rentokil shares were down 1.1% at 276.4p in early morning trading Monday.