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Investing.com - Wells Fargo (NYSE:WFC) raised its price target on Rollins (NYSE:ROL) to $65.00 from $63.00 on Monday, while maintaining an Overweight rating on the pest control company’s stock.
The firm cited steady consumer demand for pest extermination services, noting that management reported minimal impact from potential consumer spending softness. Wells Fargo highlighted that Rollins’ ancillary services have consistently outpaced the company average, and the company is experiencing minimal impact from tariffs as it sources very little across borders.
Rollins remains confident in achieving 3-4% overall pricing, with relatively stronger pricing for its Commercial segment. The company expects incremental margins to improve throughout the year, primarily due to easier comparisons as it laps heavy selling and marketing investments made in the second half of 2024.
Wells Fargo noted that secular trends are expected to drive further market penetration in an industry that currently has less than 20% penetration. Key themes highlighted by management include increasing pest resistance to treatments and the impacts of climate change, which can shift pest activity patterns.
The firm’s new price target is based on 50 times its 2026 estimated earnings per share, reflecting a multiple in line with Rollins’ historical relative valuation to the market. Wells Fargo expressed increased confidence in Rollins’ ability to execute in the current environment, as pest control demand appears unaffected by macroeconomic conditions.
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