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Broker tips: Rentokil Initial, Everyman Media

By Iain Gilbert

Date: Friday 21 Jan 2022

Broker tips: Rentokil Initial, Everyman Media

(Sharecast News) - Analysts at Berenberg hiked their target price on pest exterminator Rentokil Initial from 510.0p to 640.0p and upgraded their stance on the stock from 'hold' to 'buy' on Friday following the firm's proposed acquisition of US firm Terminix.
Berenberg stated Rentokil's proposed acquisition completely changed the competitive landscape in North American pest control and would leave the firm in "a very strong position", with a leading 31% share of the market versus the next peer at 21%.

The German bank also said Rentokil had the management team and track record to turn Terminix around and lift its business model to its own level.

"The combined business will have a household name brand in residential pest control to complement Rentokil's premium commercial portfolio. Furthermore, the combined North American business will look a lot more like competitor Rollins, which trades on a healthy premium," said Berenberg.

"This leaves significant scope for upside on valuation and the sell-off after the deal announcement creates an attractive entry opportunity."

Analysts at Canaccord Genuity reiterated their 245.0p target price on cinema operator Everyman Media Group on Friday after the firm revealed it had delivered a "strong end to the year".

Canaccord Genuity said the stronger-than-expected performance across December had resulted in further upgrades to its full-year estimates for both the group's revenue and adjusted underlying earnings forecasts, upping 2021 revenue forecasts by 5% to £48.7m and adjusted EBITDA by 19% to £8.3m.

The Canadian bank also stated that Everyman's performance in recent weeks had been "very encouraging", especially in the face of the emergence of the Covid-19 Omicron variant and the implementation of Downing Street's Plan B measures to curb its spread.

"We have previously highlighted the growth opportunity available to the group, including a number of new site openings over the coming 24 months, and believe EMAN looks well placed for future growth. The film slate for the year ahead is also exciting and varied," said Canaccord, which reiterated its 'buy' rating on the stock.

"At this stage, we conservatively leave outer year forecasts unchanged, which assume no further Covid-19 restrictions, albeit we remain cognisant that the situation remains fluid with a degree of uncertainty."

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