Bunzl Shares Back to Buy After Recent Decline

Citi analysts said in a note this week that they have upgraded Bunzl (LON: BNZL) back to “Buy” following a recent downturn in its stock performance. 

The upgrade comes after Bunzl shares underperformed the market by 8% since December when the company warned of deflationary pressures impacting organic growth and margins. 

At that time, Citi downgraded Bunzl from “Buy” to “Neutral” due to valuation concerns, despite maintaining their target price of 3,700p a share.

The recent shift back to a “Buy” rating is attributed to increased market uncertainty, particularly amid rising bond yields. 

“Given increased market uncertainty on the back of rising bond yields, we upgrade our rating back to Buy,” said the bank.

Citi notes that Bunzl offers an ETR of approximately 15%.

Bunzl, a distribution and outsourcing company, has faced challenges due to what it saw as deflationary headwinds but the upgrade suggests renewed confidence in the company's ability to navigate current market conditions and deliver value to investors.

Citi maintained its 3,700p target on the stock, which is down around 6.5% in the last three months, but has climbed over 2% in the last week of trading.