Rollins (ROL) "could have a good growth quarter" with margin upside potential due to reduced advertising spend and strong demand from digital channels, UBS Securities said in an earnings preview on Wednesday.

Industry checks show strong retention and new business trends in pest control during Q2, with especially healthy activity in digital channels and a strong June, according to the preview.

The firm said price increases in pest control were slightly above inflation levels and support potential margin expansion across the industry.

"Orkin digital advertising spending was down meaningfully year-over-year in April/May," UBS said. It is possible Rollins "is getting strong enough organic traffic without needing to spend as much."

The firm raised its price target to $59 from $58 with a neutral rating on Rollins' stock.

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