Rentokil Shares Upgraded, QinetiQ Started at Buy

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Sam Boughedda
Updated: 24 Jan 2022

Key points:

Over the weekend, analysts at Jefferies and Berenberg assigned buy ratings to QinetiQ (LON: QQ) and Rentokil (LON: RTO). However, despite the positive ratings, Rentokil shares are down 1.6% Monday, while QinetiQ shares are flat on the day. Here's what the analysts said…

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David Farrel at Jefferies initiated coverage of QinetiQ with a Buy rating and 350p price target. In a note to clients, the analyst was quoted by TheFly as saying that he believes QinetiQ has attractive growth opportunities in front of it, which are supported by a record period for orders in the first half of 2022.

Farrel added that recent execution issues are transient rather than systematic and he finds the current “8.5-times annualized fiscal 2023 EV/EBIT multiple a compelling entry point.”

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Meanwhile, Berenberg analyst Cormac Keane upgraded Rentokil to Buy from Hold, setting a price target of 640p, up from 510p. In a research note, Keane explained Rentokil's acquisition of Terminix completely changes the competitive picture in North American pest control and puts Rentokil in a “very strong position” with a 31% share of the market versus their nearest competitor at 21%.

In addition, the analyst explained that Rentokil has the management team and track record to turn Terminix around and raise its model to Rentokil's level.

Elsewhere, BofA analyst Andrew Sinclair upgraded Hargreaves Lansdown (LON: HL) shares to Buy from Neutral, assigning a 1,625p price target, while Investec analyst Ian Gordon upgraded Close Brothers (LON: CBG) shares to Buy from Hold, setting a 1,430p price target.

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