RBC upgrades Bunzl to 'outperform' with a 4,000p PT, citing growth potential and strong performance

From Investing.com: 2024-12-16 03:41:21

Shares of Bunzl plc rose after an upgrade from RBC Capital Markets to “outperform” with a price target of 4,000p. RBC cited Bunzl’s growth from organic margin expansion, M&A activity, and share buybacks. The company’s strong position in defensive markets, consistent performance, and long-term growth strategy were highlighted.

RBC compared Bunzl favorably to companies like Compass and Diploma, noting its undemanding valuation. Bunzl’s compound annual growth rate of 9% in adjusted EBIT over two decades showcases its ability to deliver through economic cycles. The company’s self-funded growth through robust free cash flow generation was also emphasized.

An optimistic outlook for Bunzl’s M&A pipeline was noted, with a history of leveraging synergies effectively through strategic acquisitions. Operational efficiencies, purchasing, and own-brand penetration are contributing to margin improvements. RBC’s revised price target reflects adjustments to its discounted cash flow model, implying a FY25 price-to-earnings ratio of 19x.

Despite potential risks like input cost fluctuations and global economic changes, RBC believes Bunzl’s consistent performance and strategic initiatives position it for sustained growth. Bunzl shares were trading at 3,520p, offering “mid-teen” total shareholder return potential at current levels.



Read more at Investing.com: Bunzl shares rise as RBC upgrades to ‘outperform’, lifts PT to 4,000p By Investing.com