Rentokil Initial Shares (RTO) Gain as Morgan Stanley Turns Bullish

Rentokil Initial shares (LON:RTO) experienced a boost today, adding 2.26% to trade at 455.17p off the back of an analyst upgrade that signals growing confidence in the company's prospects.

The upward movement in Rentokil's share price has been boosted by Morgan Stanley's revised outlook. Analyst Annelies Vermeulen upgraded Rentokil Initial to Overweight from Equal Weight, also raising the price target to 520 GBp from 450 GBp. This adjustment reflects Morgan Stanley's broader 2026 outlook for the European business services group, where Rentokil now stands as a preferred stock alongside Experian, Diploma, Verisure, Bureau Veritas and ISS. While the analyst maintains caution on staffing and chemical distribution sectors, Rentokil's specific strengths appear to outweigh these concerns.

This upgrade builds upon a series of positive assessments from other prominent financial institutions. Bank of America (BofA) upgraded Rentokil to ‘Buy' in December 2025 with a price target of 510 pence, citing increased visibility on the integration of Terminix and potential margin expansion. BofA noted that Rentokil's shares were trading at a discount relative to its historical mid-cycle multiple, presenting an attractive entry point for markets given the expected earnings per share compound annual growth rate of 12% from 2025 to 2028. Their analysis also pointed to a light positioning in Rentokil shares, with a notable short interest, suggesting room for upside as the market recalibrates its view on the company.

Bernstein also expressed optimism, double upgrading Rentokil Initial to ‘Outperform' in October 2025 and increasing the price target substantially to 570 pence from 313 pence. Bernstein highlighted signs of accelerating organic revenue growth, anticipating a range of 3% to 5%, fueled by a healthier market environment and the benefits of ongoing strategic investments. Jefferies resumed coverage with a ‘Buy' rating and a price target of 475 pence, focusing on improving momentum in Rentokil’s U.S. pest control growth, supported by a new marketing strategy and successful rebuilding of inbound lead flow. They forecast an acceleration to more than 3% growth for the company in fiscal year 2026.

JPMorgan reiterated its ‘Overweight' recommendation for Rentokil Initial, with a price target of 477 pence, highlighting anticipated improvements in organic growth trends and cash conversion. These improvements are expected as integration costs and legacy termite claims subside, providing management with greater flexibility as growth normalizes.

Institutional investors have also increased their stakes in Rentokil Initial, with Sunriver Management more than doubling its holdings and Bank of Montreal significantly increasing its position. These moves suggest a growing confidence in the company's strategic direction and financial health.

The analyst upgrades and increased institutional investment reflect a growing belief in Rentokil Initial's strategic initiatives, particularly the integration of Terminix and anticipated margin improvements. While integration challenges remain a point of concern for some, the overall sentiment has shifted positively, influencing the company's share performance and suggesting a potentially brighter outlook for Rentokil Initial. The markets are reacting favourably to the series of positive signals, suggesting continued upward momentum could be on the cards after a break above 450p.