Back to 350p; Now What? Updating Estimates, Investor Feedback + 10 Questions for Management

研报英文原文证据摘录

Back to 350p; Now What? Updating Estimates, Investor Feedback + 10 Questions for Management

IdeaMimprovement can look like. Timing is also uncertain, with any progress expected to

be lumpy/non-linear and potentially a multi-year period to get back to market level

growth and profitability.

Stay Overweight on MT potential, but path to re-rating likely to be lumpy: We

view Rentokil as a well positioned business in structurally growing end markets,

capable of delivering attractive margins and returns. The shares have been volatile

over the past three years amid choppy/soft organic growth, earnings downgrades

and strategic execution uncertainty, but in recent quarters North America has

delivered sequential growth improvement as strategic changes gain traction. While

2Q saw a slight slowdown in US pest organic growth, we believe fundamentals

largely remain intact. We see meaningful medium-term upside from stronger

growth, margins and cash conversion potential, but acknowledge more uncertainty

on execution, meaning the path to multiple recovery looks more opaque in the near

term. While we cannot rule out further downside risk to estimates in the coming

months, given a lack of quantitative guidance from management and the possibility

of further re-investment needed to accelerate growth, this now looks largely priced

in. Any signs of improvement in NA organic growth and margins into 2027 should

boost confidence in the turnaround and support a re-rating.

Following the 1H26 results, we include 10 questions and discussion topics that

investors may like to ask management in the coming weeks.

1. What gives you confidence that FY26 profit will still be in line with

market expectations? Specifically, what 2H assumptions are embedded for