Broker tips: JD Sports, Rentokil Initial
By Iain Gilbert
Date: Monday 03 Aug 2026
(Sharecast News) - Analysts at RBC Capital Markets downgraded JD Sports to 'sector perform' from 'outperform' on Monday as they warned that conditions across the sports‑fashion market remained difficult and heavily promotional, particularly in JD's core regions.
RBC Capital said JD remained a well‑managed and strongly cash‑generative business, but argued that weaker brand momentum in the mass market and pressure on its younger customer base justified a more cautious stance after a year‑to‑date rerating in the shares.
In the US, which accounts for about 38% of JD's sales, RBC expects the current K‑shaped consumer pattern to persist, with lower‑income shoppers still sensitive to cost‑of‑living pressures such as higher fuel prices. It also flagged tougher comparatives and a lack of "brand heat" for major footwear labels, including Nike.
In Europe, around 34% of sales, JD's self‑help programme was said to be on track, with improvements in automation, replenishment speeds and distribution costs. Challenges remain in Germany, where parts of the market favour mono‑brand retailing, and some store consolidation was expected.
The UK, which makes up roughly 25% of sales, was described as mature but highly promotional, with excess inventory across big brands and JD's younger cohort exposed to employment pressures and cumulative inflation.
The Canadian bank, which reiterated its 100p target price on JD, trimmed its forecasts for the stock, with FY27 pre-tax profit expectations reduced by 2% and FY28 set 4% below consensus.
RBC added that while valuation remains low at around 8x CY27 earnings and buybacks continue to support earnings per share, it thinks industry conditions will take time to improve.
Deutsche Bank lowered its target price on Rentokil Initial to 405p from 465p, keeping a 'hold' rating after the group reported softer second‑quarter trading in its key North American pest‑control arm.
The German bank noted that Rentokil shares fell sharply after Q2 organic growth in US Pest Services came in at 2.4%, below Deutsche Bank's 3% forecast and down from 2.8% in Q1.
Management highlighted lagging commercial demand - in contrast to stronger commercial trends reported by Rollins and Ecolab - and weaker lead generation late in Q2 and into July, mainly in termite services and concentrated in softer housing markets.
Rentokil also withdrew its 20% North America EBIT margin target for FY27, saying it would instead increase investment to accelerate organic growth. Deutsche Bank said the shift in strategy, combined with tougher US comparatives and a lack of broad‑based brand momentum, justified the target price cut.
Reporting by Iain Gilbert at Sharecast.com
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN