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STOCKS NEWS UK-Rentokil climbs on Q2 profits, cost cuts
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07:15GMT 31July2009-Rentokil (LSE: 647054.L - news) climbs on Q2 profits, cost cuts
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Rentokil Initial shares rise 7 percent to a 12-month high of 97.25 pence after the pest control to parcel delivery firm beats second-quarter profit forecasts and raises its target for cost cutting.
UBS (Virt-X: UBSN.VX - news) analysts expect the full-year consensus profit forecast of 133 million pounds to rise 5 percent or more, and think a quicker-than-expected recovery at the group's City Link parcels business could drive upgrades to 2010 forecasts.
However, Seymour Pierce analysts think the good news is already factored into Rentokil's share price.
'The shares are trading on 19.4 times our FY2009 estimates, which now looks too high for a late cycle services company and is out of line with the ongoing risks,' they write, keeping a 'sell' rating on the stock.
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