Bunzl Shares (BNZL) Hit New Low on Latest Downgrade

Bunzl's share price (LON:BNZL) has made a new 52-week low today at 2,010p, as the company grapples with a series of operational and economic headwinds. The recent downgrade by BNP Paribas has further dampened market sentiment.

Bunzl shares are trading 2.23% lower at 2,018p, mildly above the freshly minted low. This decline follows BNP Paribas's decision to downgrade the stock to “Neutral” from “Outperform,” setting a price target of 2,350p. The firm suggests that there are more compelling investment opportunities within the broader sector.

The stock's downward trajectory is rooted in several challenges that have emerged over the past few months. A profit warning issued in April 2025 cited a more challenging economic environment, with the company reporting a year-on-year decline in adjusted operating profit for the first quarter. Margin pressures in North American and Continental European markets were significant contributors to this downturn. Consequently, Bunzl revised its 2025 guidance, anticipating moderate revenue growth primarily driven by acquisitions, alongside broadly flat underlying revenue. Operating margins are now projected to be moderately below 8.0%, a decrease from the 8.3% reported in 2024.

Operational challenges in North America have further exacerbated Bunzl's struggles. The transition from a branch-led model to a centralized structure has led to execution issues and disruptions, including the loss of a high-margin grocery distribution contract. These self-inflicted setbacks have amplified the impact of the broader economic pressures and contributed to the profit warning.

The View From Wall Street

The analyst community has responded to these challenges with a series of downgrades and revised price targets. J.P. Morgan downgraded Bunzl to “Neutral” from “Overweight,” reducing the price target to 2,700p from 3,500p, citing ongoing execution setbacks and margin pressures. R

BC Capital Markets also downgraded the stock to “Sector Perform” from “Outperform,” reducing the price target by 10% to 2,350p, attributing the downgrade to rising competition and waning investor confidence following the April profit warning.

Goldman Sachs offered a contrasting view, upgrading Bunzl to “Neutral” from “Sell,” recognizing the stock's year-to-date underperformance and a more balanced risk/reward profile, setting a new 12-month price target of 2,510p, implying approximately 5% upside.

In response to the macroeconomic uncertainties, Bunzl has paused its £200 million share buyback program for the remainder of 2025, after purchasing around £115 million of shares year-to-date. This decision underscores the company's cautious approach to capital allocation amid the current economic climate.

The combination of profit warnings, operational challenges, analyst downgrades, and the suspension of the share buyback program has collectively weighed on Bunzl's share price. The current market reaction reflects investors’ concerns regarding the company’s ability to navigate the evolving market conditions and effectively address internal operational issues.

Bunzl's near-term performance will hinge on its ability to execute its operational turnaround and adapt to the prevailing economic headwinds. The market's sentiment appears cautious, influenced by recent events, indicating a period of heightened scrutiny for the company's strategic initiatives and financial results.