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(Sharecast News) - Deutsche Bank lowered its target price on Rentokil Initial to 405p from 465p, keeping a 'hold' rating after the group reported softer secondquarter trading in its key North American pestcontrol arm.
The German bank noted that Rentokil shares fell sharply after Q2 organic growth in US Pest Services came in at 2.4%, below Deutsche Bank's 3% forecast and down from 2.8% in Q1.
Management highlighted lagging commercial demand - in contrast to stronger commercial trends reported by Rollins and Ecolab - and weaker lead generation late in Q2 and into July, mainly in termite services and concentrated in softer housing markets.
Rentokil also withdrew its 20% North America EBIT margin target for FY27, saying it would instead increase investment to accelerate organic growth. Deutsche Bank said the shift in strategy, combined with tougher US comparatives and a lack of broadbased brand momentum, justified the target price cut.
Reporting by Iain Gilbert at Sharecast.com
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