-- Rollins (ROL) is expected to deliver softer growth in Q1 given choppier weather conditions early in the quarter, UBS Securities said Friday in a note.
The choppier first half of Q1 may impact overall growth somewhat, but retention for existing customers is expected to remain strong, with pricing also seeing very little pushback, according to the note.
UBS highlighted lower digital advertising spend in early Q1 which suggests a delayed seasonal ramp that could reflect weather conditions and competitive activity.
The brokerage estimates Q1 organic growth of 5.9%, down from a prior estimate of 6.7%. The firm now expects Q1 adjusted EBITDA of $188 million, down from $190 million and slightly ahead of the Street estimate of $187 million.
UBS said a second consecutive weaker growth quarter from a company that has historically been a high-quality compounder could be somewhat challenging from a narrative perspective, especially as Rentokil shows signs of stabilizing growth.
The brokerage expects Rollins to reaffirm the 7% to 8% organic growth guidance for 2026. It lowered its 2026 organic growth estimate to 7.1% from 7.3% and reduced its 2026 EPS estimate to $1.22 from $1.25 and its 2027 EPS estimate to $1.32 from $1.35.
UBS has a neutral rating on Rollins and lowered its price target to $58 from $62.
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