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ServiceMaster A Leader In 'Recession-Resistant' Pest Control, Buckingham Says In Positive Initiation

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ServiceMaster A Leader In 'Recession-Resistant' Pest Control, Buckingham Says In Positive Initiation

ServiceMaster Global Holdings, Inc. (NYSE: SERV) remains a leader in the recession-resistant pest control market through its Terminix brand and should remain competitive, according to the Buckingham Research Group. 

The Analyst

Buckingham’s James Clement initiated coverage of ServiceMaster with a Buy rating and $64 price target.

The Thesis

ServiceMaster’s Terminix brand is an industry leader in the $12-billion pest control market, Clement said in the initiation note. 

The company, along with competitors Ecolab Inc (NYSE: ECL) and Orkin parent company Rollins, Inc. (NYSE: ROL), generate 30 percent of industry revenue and hold strong positions in the sector, he said.

“The remaining competitors are typically small 'mom-and-pop' operators with significant dis-economies of scale that often lack the resources to remain competitive.”

Terminix has an 80-20 split between commercial and residential pest control services, giving it a strong standing in a “recession-resistant” market, the analyst said.

ServiceMaster’s American Home Shield spinoff will “likely unlock some value” Clements said, noting that despite a capital-light model, the home warranty company's growth has “far outpaced anything in pest control." 

Price Action

ServiceMaster shares were up 1.95 percent at $55.85 at the close Wednesday. 

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Latest Ratings for SERV

DateFirmActionFromTo
Dec 2019MaintainsEqual-Weight
Nov 2019Initiates Coverage OnBuy
Oct 2019MaintainsNeutral

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Posted-In: American Home Shield Orkin TerminixAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga

 

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