The outlook statement looks positive with a pick up expected in the second half. However, we do not think this will drive consensus earnings upgrades with no pick up in Europe seemingly on the horizon. We maintain a ‘neutral’ stance on the shares.
CAROLINE DE LA SOUJEOLE
The outlook statement suggests that despite the challenging market conditions in Europe, the momentum seen in the second quarter should be maintained in the second half. We see no reason to change our ‘hold’ recommendation.
The shift in momentum should prove a helpful platform for new CEO Andy Ransom’s strategy for growth in the medium term, but with organic revenue still in decline and tough conditions in Europe, Rentokil may need a more sustained level of momentum to shift the shares out of their current inertia.