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(Sharecast News) - UBS upgraded Rentokil Initial on Thursday to 'buy' from 'neutral' and lifted the price target to 540p from 430p.
The bank noted it's been broadly cautious on Rentokil since its 2022 Terminix acquisition, but said that last year's strategy reshaping means it now sees realistic potential for volumes to inflect in 2026, ending around three years of share losses.
"We expect more actions to then accelerate growth under new management, but the North American cost base already looks well-invested given issues over the past few years and so believe this is achievable for little incremental cost," UBS said.
The bank said it sees the North American pest business accelerating earnings over the next 12 months and forecasts a 7% increase in group EBITA compound annual growth rate for FY26 to FY28, with upside from re-accelerating M&A or other strategic options as profits stabilise.
This leaves Rentokil NA on an implied circa 17x EV/EBITA, versus similar US service network peers on around 25x, UBS said.
At 1225 GMT, the shares were up 4.1% at 486.40p.
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