By Paul R. La Monica

Artificial intelligence chatbots might be able to give you some decent tips on how to get rid of termites, ants, and other pesky creatures, but at the end of the day, it's probably best to call a professional. That's one reason why Rollins -- which owns Orkin, HomeTeam Pest Defense, Critter Control and several other exterminator brands -- has been a solid stock this year.

Shares of Rollins are up more than 25% in 2025, and an analyst at JPMorgan thinks there is more upside ahead -- mainly because it is an AI-proof stock. JPMorgan's Tomohiko Sano launched coverage of Rollins Friday with an Overweight rating -- basically a Buy -- and a price target of $70 a share. That's more than 20% above the stock's current price. Shares rose 3% Friday.

If anything, AI and other technological advances will help Rollins as opposed to it, Sano thinks.

"Digital tools are being rolled out across the network, including technician apps, route optimization, paperless contracts, and sales enablement platforms," Sano wrote, adding that "management views digitization not as a substitute for people but as an enabler that improves productivity, consistency, and customer experience while supporting the frontline workforce."

Investors need to be prepared to pay a lofty premium for the stock, though. Rollins trades at nearly 47 times earnings estimates for 2026, compared to a price-to-earnings ratio of 32 for rival Ecolab and a multiple of just 17 for competitor Rentokil, which owns Terminix. Still, Rollins is trading right around its 5-year average forward P/E -- so it's not looking stretched. And Sano thinks the premium is worth it.

He noted that Rollins has "maintained a clear valuation premium over its competitors, Rentokil and Ecolab, reflecting its strong operational track record and consistent financial performance," adding that the "multiple has remained notably higher than both peers, indicating sustained investor confidence in its business model and growth prospects."

"The company's ability to deliver stable results and navigate market challenges has set it apart within the sector. Rollins' superior valuation underscores its position as a leader in operational efficiency, " Sano wrote.

The rest of Wall Street is a little less certain that Rollins should trade at such a high valuation. According to FactSet, 47% of the analysts covering Rollins recommend it as a Buy, while another 47% rate it a Hold and the remaining 6% think it's a Sell. The consensus price target of $61 is just 3% above current levels. Analysts are forecasting annual earnings increases in the low-to-mid-teens for the next few years.

For what it's worth, Warren Buffett is a fan of the pest control business, too. Berkshire Hathaway recently bought a privately held pest control company named Bell Laboratories -- not to be confused with the famous telecom research outfit Bell Labs that is now owned by Nokia.

So the combination of Buffett's endorsement of the industry and the fact that AI won't make exterminating pests obsolete should mean that shares of Rollins won't get stuck in place like a rat in a glue trap.

Write to Paul R. La Monica at paul.lamonica@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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September 26, 2025 14:49 ET (18:49 GMT)

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