Bunzl Raised to Buy as Analyst Highlights ‘Improving Underlying Trading Trends’

In a recent note, Stifel upgraded Bunzl (LON: BNZL) shares from Hold to Buy, citing strengthening trading momentum, solid financials, and reduced macroeconomic risks. 

The broker raised its price target for the stock to 3,500p from 3,470p.

Stifel noted that Bunzl is benefiting from “improving underlying trading trends”, with pricing now stabilised and expected to become more inflationary through FY25. 

Combined with steadily recovering volumes, this is said to set the stage for a return to positive organic growth in the year ahead, according to the firm.

The analyst also pointed to Bunzl’s balance sheet strength and strategic flexibility. They explain that with forecast leverage of around 1.6x by the end of FY25—below its 2.0–2.5x target range—the group could have more than £900 million in capacity to deploy.

Furthermore, Stifel expects Bunzl to maintain an annual capital allocation of around £700 million through to FY27, supporting continued M&A activity and share buybacks.

When it comes to Trump’s trade tariffs, Stifel believes Bunzl’s high level of domestic sourcing—around 75%—will limit the impact.

While Stifel made only minor adjustments to its forecasts following Bunzl’s FY24 results, the combination of operational resilience and capital flexibility is seen as an advantage, underpinning a more positive outlook for the distribution and outsourcing group.