(Sharecast News) – RBC Capital Markets cut its price target on Rentokil Initial on Wednesday to 575p from 610p as it downgraded forecasts for forex and a greater back-end loading of TMX synergies, but said it believes the long-term story remains intact.
The bank said its earnings per share estimates for 2024/25 have come down by around 6% to 7%, while the forecast for 2026 has been reduced by 4%, largely due to forex.
“We expect management to come out with a credible plan to protect organic growth during the integration and, whilst there may be a cost to this – given the margin success of the initial pilots, we continue to see upside potential to the overall synergy number,” RBC said.
The bank said that while it admits the risk profile has increased, it sees the de-rating as an attractive entry point for long-term funds.
RBC rates the shares at ‘outperform’.
