Cautious Outlook on Rentokil Initial Amid Declining Digital Engagement and Strategic Adjustments

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 several factors impacting Rentokil Initial’s performance. The company has been experiencing a significant decline in web traffic for its largest pest control brands, which is a critical channel for customer acquisition in the residential pest control market. This decline in digital engagement is consistent with Rentokil’s own reports of weak inbound lead flow, suggesting challenges in achieving organic sales growth.
Additionally, Rentokil’s strategic adjustments, such as expanding its branch network and retaining key regional brands, indicate efforts to address these growth challenges. However, the effectiveness of these strategies remains to be seen, and the company plans to experiment with new sales channels like door-to-door sales. Given these uncertainties and the competitive landscape, Vermeulen has opted for a Hold rating, reflecting a cautious outlook on Rentokil’s near-term growth prospects.

In another report released on March 27, J.P. Morgan also maintained a Hold rating on the stock with a £4.10 price target.

Based on the recent corporate insider activity of 7 insiders, corporate insider sentiment is neutral on the stock.