Bunzl (OTC: BZLFY) received an upgrade from JPMorgan on Monday, increasing its rating from Neutral to Overweight. The price target for Bunzl’s shares was raised from GBP 36.60 to GBP 39.80.
The upgrade reflects JPMorgan’s confidence in Bunzl’s improved margins and solid medium-term prospects. Initially rated Neutral in March due to inflation concerns, JPMorgan’s view shifted after Bunzl’s strong first half of 2024 financial update, showing significant margin improvements and a clear capital allocation strategy.
Key to this positive outlook is Bunzl’s growth in its own brand within the Grocery and Foodservice sectors, which represent 40% of revenue, resulting in higher earnings before interest, taxes, and amortization (EBITA).
Additionally, Deutsche Bank upgraded Bunzl’s earnings forecasts, expecting organic sales growth by year-end, supported by acquisitions and easing deflation pressures. Despite a 5% sales decline in the first half of 2024, Bunzl is predicted to return to about 2.5% annual growth starting in 2025.
RBC Capital also upgraded Bunzl from Underperform to Sector Perform, while HSBC raised their rating from Hold to Buy, setting a new price target at GBP 34.60.
InvestingPro Insights
Bunzl’s market capitalization is $15.12 billion, with a P/E ratio of 23.74, indicating a strong investor interest. The company has consistently paid dividends for 45 years, with a history of increases, reflecting financial stability. With revenues of $14.67 billion and a gross profit margin of 27.63%, Bunzl maintains solid profitability.
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