Broker tips: Keller, Crest Nicholson, Rentokil Initial

(Sharecast News) - Analysts at Berenberg lifted their target price target on geotechnical contractor Keller from 2,550p to 3,150p on Tuesday, after the firm issued a stronger‑than‑expected trading update that prompted a material upgrade to full‑year guidance. Keller said both revenue and underlying earnings were now expected to finish "materially ahead of current market consensus", previously £3.15bn and £223m, respectively, driven by strong organic momentum and a record £1.9bn order book.

Berenberg said the update underlined robust demand across key markets despite pockets of macro pressure in some regional residential sectors.

The German bank noted that the acceleration in trading momentum since May was entirely organic, with no acquisitions or disposals, and heavily weighted towards the US, where Keller has secured major infrastructure work including the multi‑year I‑40 highway remediation project. Management also highlighted continued margin discipline and a buoyant tendering environment.

Berenberg said North America remained Keller's "primary engine of growth", with strong infrastructure and data‑centre volumes offsetting a slowdown in south Florida's residential market. Europe and the Middle East delivered solid results, supported by strength in Scandinavia and central Europe, while Asia‑Pacific traded in line with expectations as momentum across Australasia helped counter pricing pressure in Australia's foundations market.

The broker added that Keller's strategic focus on high‑growth subsectors such as infrastructure and technology continued to pay off, and that the group's net cash position at the end of FY25 left it with meaningful capital‑allocation flexibility.

Berenberg said Keller now trades on a 10.3x FY26 price-to-earnings ratio, 5.0x EBITDA and 7.4x EBIT.

RBC Capital Markets has reiterated an 'outperform' rating on Crest Nicholson ahead of the housebuilder's results next week, but warned that its investment case could be clouded by a potential equity raise.

Back in April, Crest Nicholson said it was looking at a temporary banking covenant relaxation from its lending group due to lower-than-expected profits, though reports last month suggested that the banking syndicate had hired restructuring experts to advise them on negotiations.

In particular, there were concerns about the company's interest coverage ratio, with FY26 expected operating income of £10m compared with net interest costs of £15m, according to RBC.

"If Crest gets by without an equity raise, the shares are priced at a very attractive entry point, but if they do raise then the effective entry point is less clear," the broker said in a research note.

If the company does go ahead with an equity raise while its shares trade at 0.25 times book value, it would be "painful", said RBC, which kept a 95p target price for the stock.

"We don't know how much value the lenders are trying to extract, but, in our view, unless the pain exceeds that of a dilutive raise, existing investors are best served by taking the short term debt financing pain. Should market conditions improve debt terms can be renegotiated, but once equity is raised, there is no turning back, and any subsequent share buybacks may come at a higher price than the equity raised (the opposite of Investment 1.01: Buy low sell high)."

Goldman Sachs upgraded Rentokil Initial to 'buy' from 'neutral' and lifted its price target on the stock to 590p from 515p.

The bank said it believes the organic growth inflection in North America, which started in the third quarter of 2025, is sustainable with a potential to reach mid-single digit levels by 2027.

"We see this improved growth allowing the company to gradually close the growth and valuation gap to peer Rollins and drive a share price re-rating," it said.

Goldman said its estimates were modestly ahead of Visible Alpha consensus in 2026/27 on EBITA as it sees Rentokil benefiting from delivery on self-help and re-investments into its footprint, reversing the slowdown seen after the closure of the Terminix deal in 2022.

"We note that the shares have been weak since 1Q results (down circa 12%), despite the steady improvement reported on the top line, and given the solid end market trends, we see this as a good entry point into the name," GS said.