Goldman Sachs has upgraded Bunzl plc from a “Sell” rating to “Neutral,” reflecting a reassessment of the company’s risk/reward profile following a notable decline in its share price this year. The investment bank has established a 12-month price target of 2,510p, which suggests an approximate 5% upside from current levels, as reported by Reuters.
Bunzl, a prominent British distribution and outsourcing company, has faced substantial challenges, with its stock value plummeting by roughly 30% in 2025. This decline was primarily influenced by a profit warning issued in April, which led to lowered expectations for both growth and profit margins for the upcoming year. The warning highlighted difficulties within Bunzl’s North American operations, which account for around 60% of the company’s total revenue, according to a report from The Times.
Despite the adverse guidance, Goldman Sachs observed that Bunzl’s first-half results remained largely in line with market expectations. Additionally, the resumption of the company’s share buyback program has mitigated some near-term risks concerning earnings and financial leverage. The bank projects that Bunzl’s EBITA margins will be 7.6% in 2025, a decrease from 8% in 2024, but anticipates gradual improvement over the following years.
Currently, Bunzl’s shares are trading at approximately 13 times Goldman Sachs’ estimated earnings for 2026, which is significantly below the historical mid-cycle average multiple of 17. The bank argues that this combination of a discounted valuation alongside Bunzl’s robust business model contributes to a reduced risk profile for investors compared to earlier in the year.
In summary, Goldman Sachs’ upgrade signals a cautious optimism regarding Bunzl’s potential recovery, as the company navigates challenges in its North American market while maintaining a resilient operational structure.
