Rollins' (ROL) Q2 results fell short of expectations as a slower-than-usual start to the peak summer pest season weighed on organic revenue growth, though Morgan Stanley expects performance to improve in the second half of the year.

The brokerage said in a Thursday note that weaker-than-expected organic revenue growth reflected softer residential digital lead volumes, particularly at Orkin. However, lead volumes recovered in late June and remained strong through July, while healthy customer retention, pricing and underlying consumer demand point to a stronger third quarter.

Morgan Stanley expects easier year-over-year comparisons and favorable El Nino-driven weather to support H2 growth but lowered its 2026 adjusted EBITDA estimate by 4% following the Q2 miss and lower expected Q3 incremental margins.

Management said business trends strengthened toward the end of June and into July, according to the report.

Morgan Stanley maintained its overweight rating on the stock and cut its price target to $60 from $65.

Rollins shares were down 2.1% in Friday trading.

Price: 38.61, Change: -0.83, Percent Change: -2.10