Bernstein double upgrades Rentokil to 'outperform', hikes price target

(Sharecast News) - Bernstein doubled upgraded Rentokil Initial on Tuesday to 'outperform' from 'underperform' and hiked the price target to 570p from 313p, saying it sees signs of inflecting organic revenue growth. The bank also said it believes that Rentokil can enjoy structural growth in line with the industry, combined with ongoing consolidation.

"Given cost and free cash flow levers available to the group under the stewardship of Paul as CFO we consider EBITA levels well underpinned," Bernstein said.

"This, combined with FCF enhancing initiatives, could considerably enhance the return on invested capital profile of the group."

The bank said that with a new CEO yet to be announced, it runs the risk of being early but upside pressure is starting to build, and it sees it as increasingly likely that investors will place a greater value on the Pest business on first signs of progress.

At 1115 BST, the shares were up 2.4% at 403.86p.