(Bloomberg) -- Rentokil Initial Plc shares plunged in London, erasing more than 2 billion pounds ($2.6 billion) in market value, after the pest-control company lowered growth expectations for its business in North America.
Organic revenue growth in the region will slow to about 1% in the second half, following a weaker-than-anticipated trading performance in July and August. The update suggests consensus estimates for adjusted pretax profit will need to be cut by 10%, Morgan Stanley analyst Annelies Vermeulen wrote in a note to clients.
Rentokil shares had their biggest drop since the 2008 financial crisis on Wednesday, closing down 20%. The firm generates around two thirds of its sales in North America following a 2022 acquisition of Terminix. Rival Rollins Inc. fell as much as 4.8% in New York.
Rentokil’s slump is a blow to activist investor Nelson Peltz, whose Trian Fund Management LP amassed a significant stake earlier this year.
The lack of growth recovery despite additional investment “will be seen as a concern by the market,” Jefferies analyst Allen Wells wrote in a note.
--With assistance from Lisa Pham.
(Updates with closing share drop.)
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