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Investing.com -- Morgan Stanley downgraded Rentokil Initial to “equal-weight” from “overweight” and cut its price target 16% to 420 pence from 500 pence, citing tougher competition in the U.S. pest control market and lower valuation multiples among peers.
Pest control and sanitation contracts renew whether markets cooperate or not, yet two of the three companies discussed here have lost nearly half their value this year while their customers keep paying. The business case and the share price are telling very different stories right now.
Pest control and sanitation companies sell contracts that customers keep renewing even when share prices collapse, and two of these three stocks are down sharply this year while their retention numbers barely flinched.
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