Cautious Hold Rating for Rentokil Initial Amidst Mixed Growth Signals and Economic Uncertainties

In a report released today, Annelies Vermeulen from Morgan Stanley maintained a Hold rating on Rentokil Initial (RTO – Research Report), with a price target of p450.00.

Annelies Vermeulen’s rating is based on a combination of factors including Rentokil Initial’s recent performance and future outlook. The company reported a modest group organic growth of 1.8% for the first quarter of 2025, with the US segment showing a slower growth rate of 0.7%. Within the US, the pest control services experienced a slight decline, which was partly due to a working day impact from the leap year.
Despite these challenges, Rentokil Initial has made progress in North America, with an increase in technician sales lead participation and improvements in paid search leads. However, organic search leads remained weak. The company has not provided any new guidance for FY25, and the outlook remains unchanged, suggesting limited impact from tariffs and a depreciating USD. Given these mixed signals, Annelies Vermeulen has opted for a Hold rating, reflecting a cautious stance amidst the current economic uncertainties.