On Wednesday, HSBC adjusted the firm's stance on Bunzl (OTC:BZLFY) Plc, a leading international distribution and outsourcing company, moving the rating from Buy to Hold. Accompanying this downgrade, the price target experienced a modest increase to £36.25, up from the previous target of £34.60.
The revision in the price target to 3,625p from 3,460p is based on a target price-to-earnings (PE) multiple of 17 times, which aligns with Bunzl's average trading multiple over the past five years when adjusted for volume. This new target is derived from an anticipated earnings per share (EPS) in 2025, which the analyst estimates to be 213p.
HSBC's assessment suggests that the new price target presents approximately a 1% upside from the current level, prompting the downgrade to a Hold rating. The decision reflects a modest expectation for the stock's growth potential.
In the analysis, HSBC acknowledges various factors that could influence Bunzl's share price. On the positive side, a stronger rebound in organic growth and a more enthusiastic market response to growth figures could drive the shares higher. Additionally, a larger or more rapid series of acquisitions than currently anticipated by the market could lead to earnings upgrades, further boosting the stock price.
Conversely, HSBC also points out potential risks that could negatively impact Bunzl's share performance. These include weaker than expected organic growth, a scarcity of acquisitions, and the possibility of adverse legislative changes affecting the packaging industry, which could all contribute to a downward pressure on the stock.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.