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Investing.com - Morgan Stanley (NYSE:MS) raised its price target on Rollins (NYSE:ROL) to $58.00 from $53.00 on Thursday, while maintaining an Equalweight rating on the pest control company’s stock. The stock currently trades near its 52-week high of $58.65, having delivered a 19.74% return year-to-date.
The firm updated its financial model for Rollins, resulting in approximately 1% higher estimates for 2025 and 2026. Morgan Stanley considers the current valuation fair at 31x 2026 EV/EBITDA. According to InvestingPro data, Rollins currently trades at an EV/EBITDA multiple of 36.3x, with impressive gross margins of 52.69%.
The investment bank noted that Rollins trades at about a 22-turn premium to peer RTO, which aligns with Cintas (NASDAQ:CTAS)’s 20-turn premium to its peer Unifirst. Analysts believe it’s appropriate for Rollins to trade at a similar multiple to Cintas (approximately 29x 2026 EV/EBITDA) given its more defensive industry position, despite having lower margins.
Morgan Stanley acknowledged Rollins’ strong execution and proven M&A strategy, along with the defensive nature of its business, particularly in potential economic slowdown environments.
Despite these positive attributes, the firm maintained its Equalweight rating, stating there are more attractive valuation opportunities elsewhere in its Business Services coverage given Rollins’ high multiple.
In other recent news, Rollins Inc . reported its first-quarter 2025 earnings, posting an earnings per share (EPS) of $0.22 and revenue of $823 million, meeting analysts’ expectations. The company also announced a quarterly dividend of $0.165 per share, payable on September 10, 2025, to shareholders of record as of August 11, 2025. In terms of analyst coverage, Jefferies upgraded Rollins’ stock rating from Hold to Buy, increasing the price target from $55.00 to $65.00, citing high-quality earnings growth and potential for strategic acquisitions. Piper Sandler initiated coverage with an Overweight rating and a $70.00 price target, noting the company’s transition to a modernized public entity. Additionally, Rollins appointed Paul D. Donahue to its Board of Directors, enhancing the board’s expertise. These developments reflect ongoing strategic changes and financial stability within the company.
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