Does this Upgrade present an opportunity for you?

Is it irrelevant, or will the Upgrade make the Rentokil Initial share price more attractive?

• The chart shows the Rentokil Initial share price since February.
• J.P. Morgan upgrades Rentokil Initial to Overweight, also improving the target price from 211p to 345p.
• Consensus summary: 9 Buys, 5 Holds, 1 Sell; Average target: 366p (Source: Bloomberg).
• Current share price 310p (at time of writing).
• Recently expanded its capabilities by purchasing pest-control business from rival Mitie Group.
• Half-year results (31 July) were encouraging, as the company beat its medium-term revenue and profit targets (+11% YoY) and confirmed FY guidance.
• Will the shares turn back, or will the upgrade push the shares back towards May highs of 356p?
• Shares -14.3% from 2018 highs; +18.65% from 2018 lows; -2.41% year-to date

Click to enlarge

Trading Rentokil Initial – An Example

Let’s say you think that Rentokil Initial shares have upside potential as result of this broker upgrade. You decide to buy exposure to £10,000 worth of Rentokil Initial using a CFD, at the current price of 310p. To do this, you need £2,000.

For the purpose of this example, let’s assume the Rentokil Initial share price rises to 356p (+14.8%). Your profit would be £1,480 from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 10% from the current price. Rentokil Initial shares continue their downtrend, they fall 10% and hit your stop-loss. Your loss would be £1,000.

This is provided for information purposes only. It should not be taken as a recommendation.