Rentokil Initial downgraded to Neutral from Buy at BofA

BofA analyst Simona Sarli downgraded Rentokil Initial (RTO) to Neutral from Buy with a price target of $29, down from $40. Although Rentokil looks better placed to reduce the quality gap to Rollins (ROL) over time after the Terminix deal, the firm sees higher integration risk in the near-term and is also taking a more cautious stance on North America, which accounts for greater than 60% of revenue, the analyst tells investors. Since the Terminix deal closed in October of 2022, the organic growth gap to Rollins has widened to 610 basis points in Q3 of 2023 from 250 basis points in 2022, the analyst noted.