On Friday, HSBC analyst Matthew Lloyd adjusted the financial outlook for Bunzl (OTC:BZLFY) Plc. (BNZL:LN) (OTC: BZLFY), elevating the stock from a "Hold" to a "Buy" rating. Accompanying this upgrade is a new price target set at GBP34.60, an increase from the previous GBP32.55.
The decision comes after an evaluation of Bunzl's performance and potential, with the analyst citing a valuation based on a target price-to-earnings (PE) multiple of 17 times. This figure aligns with the average trading multiple of the stock over the past five years, on a volume-weighted basis.
The new price target is derived from a forward-looking estimate to 2025 earnings per share (EPS) of 203.3p, a revision from the earlier 17.0 times 2024 estimated EPS of 191.5p.
Bunzl, known for its effective management and proficiency in mergers and acquisitions (M&A), has been recognized for maintaining a lower risk profile for its estimates following recent M&A activities.
The analyst points out that if Bunzl can sustain organic growth, preserve its profit margins, and continue enhancing profits through strategic M&A, it could be considered a high-quality, lower-risk investment.
The upgrade reflects confidence in Bunzl's ability to navigate the market and capitalize on its strengths. The analyst's comments suggest that the company's consistent performance and strategic business moves have positioned it favorably for future growth and investment.
In other recent news, Bunzl Plc has been a focal point of recent developments in the investment world. RBC Capital has raised the target price of Bunzl shares from GBP26.00 to GBP27.00, maintaining an Underperform rating.
This adjustment comes in the wake of Bunzl's recent mergers and acquisitions, alongside an updated guidance in its second-quarter trading update. RBC Capital's revised estimates for Bunzl anticipate a 6-7% increase in earnings per share over the next few years, a forecast leading to a roughly 4% increase in the price target for the company's shares.
Despite the rise in the price target, RBC Capital maintains a cautious view on Bunzl's prospects, citing limited underlying organic growth and heavy exposure to the business-to-business-to-consumer sector. The firm's cautious stance is further underlined by the current macroeconomic conditions. These are the recent developments surrounding Bunzl Plc.
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