RBC Capital upgrades Bunzl to 'sector perform'
RBC Capital Markets upgraded on Thursday to 'sector perform' from 'underperform' and lifted the price target to 3,350 from 2,700p as revenue headwinds ease.
"After a period of deflation-linked underperformance, we raise our rating to SP to reflect, principally, a brighter revenue and margin outlook, confidence around M&A execution and a new capital allocation strategy which we think widens the investor audience," RBC said.
The bank said the price target increase reflects the value of future M&A.
RBC also said it was lifting its FY24 and FY25 earnings per share estimates by around 2% and 4%, respectively, to reflect stronger assumed margin progression, incremental M&A and around £450m of planned share buybacks.
"Though we believe BNZL will remain a 'sleep tight at night' stock for longer-term investors, we currently prefer DCC and RS1 in the B2B distribution sub-sector," it said.
At 1040 BST, the shares were up 1.6% at 3,516p.
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.