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(Sharecast News) - Morgan Stanley upgraded Rentokil Initial and RS Group on Tuesday, but downgraded DCC as it took a look at the European business services sector.
The bank lifted Rentokil to 'overweight' from 'equalweight' and upped the price target to 520p from 450p.
It said it sees improving organic momentum in North America pest control through 2026 driving a re-rating, and scope for significant value to be unlocked over the medium term.
Morgan Stanley upgraded RS Group to 'overweight' from 'equalweight' and kept the price target at 790p. It downgraded DCC to 'equalweight' from 'overweight' and cut the price target to 5,750p from 6,150p.
"At RS Group, good progress made on costs, technology and efficiencies puts the group in a strong position to benefit from a cyclical recovery," it said. It said the stock has moved up to number 9 on its 'Best Business Model' ranking on a better organic outlook and improved cash conversion.
The bank said it was neutralising DCC to equalweight as it sees few reasons to be positive into 2026 and limited catalysts for a re-rating as the group transitions towards a pure-play energy business
In the note, Morgan Stanley said its preferred stocks for 2026 are Experian, Diploma, Rentokil, Verisure, Bureau Veritas and ISS.
At 1420 GMT, Rentokil was up 4% at 462.9p, RS Group was 1.3% higher at 643.50p and DCC was down 2% at 4,334p.
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