Shares of termite control services company Rollins (ROL) - Get Report were falling Wednesday after the stock was downgraded to sell from hold by analysts at Stifel as the firm is concerned about the company's free cash flow growth.
The firm lowered its price target to $25 per share from $36.50 share as it also has concerns about rising organic acquisition costs and the company's margins.
"To be clear, ROL is a well run company that has spent several years improving its customer experience and with it the organic growth and free cash flow conversion. So what is driving the sell? We are focused on three items, sustainable FCF growth, rising organic acquisition cost and the improbability ROL can repeat the scope of margin improvement it extracted over the past 15 years for the next 10 years," wrote analyst Michael Hoffman.
The firm now sees revenue for the second quarter of $522.3 million, down from its previous estimate of $531.8 million. For the year, Stifel estimates revenue of $1.993 billion, down from its previous view of $2.051 billion.
The stock fell 6.2% to $34.37.