Morgan Stanley downgraded Rentokil Initial to equal-weight from overweight and reduced its price target 16% to 420 pence from 500 pence. The brokerage said private equity-backed pest control operators are gaining market share and growing faster than listed companies in the U.S., challenging Rentokil and Rollins. Private equity now represents more than 16% of revenue among the top 100 U.S. pest control companies, up from 1% a decade ago, while Rentokil and Rollins together represent 51%. Higher acquisition valuations and Rentokil's reduced 2026 spending guidance of about $120 million, down from roughly $200 million, further constrain expansion. Morgan Stanley also said large language models favored independent operators in search recommendations across 25 U.S. markets, potentially affecting Rentokil's customer acquisition and digital lead generation. With shares down more than 30% since June, the brokerage sees limited near-term scope for a re-rating ahead of a weak expected third-quarter update and a lengthy turnaround. Rentokil is scheduled to report that update on Oct. 22. Morgan Stanley maintained an overweight rating on Rollins but lowered its price target to $45 from $60, citing its multi-brand, multi-channel model as a potential advantage. For Rentokil, faster U.S. organic growth and quicker execution of its strategic plan were identified as potential upside risks.