UK-based Bunzl PLC (GB:BNZL) has projected a 3% year-over-growth in its 2024 revenue at constant currency, mainly driven by its key acquisitions. However, it forecasts a 0% to 1% decline in revenues at the actual exchange rate and a slight decline in underlying revenues in 2024. Meanwhile, investors responded negatively to the update, causing a 4.3% decline in the stock price as of writing.
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Bunzl is a distribution company offering products and solutions across multiple sectors, including healthcare, grocery, hygiene, etc.
Bunzl Reports Upbeat Outlook for Operating Profit
Although Bunzl flagged that deflation is expected to persist longer, potentially impacting operating profit, the group’s adjusted operating profit for 2024 is still expected to show a strong year-over-year increase, based on constant exchange rates. Additionally, Bunzl’s operating margin for 2024 is expected to remain strong and slightly higher as compared to the previous year.
The company further highlighted its recent acquisitions, such as the UK-based C&C Group and France’s Comodis, as key factors in strengthening its pipeline and expanding its presence in regional markets. Notably, Bunzl has committed over £850 million in spending in 2024, marking a record for the company.
Furthermore, Bunzl remains on track with its £250 million share buyback, launched in August, of which around £200 million has been completed. The company launched another £200 million buyback to be carried out in 2025.
RBC Analyst Turns Bullish on BNZL
Yesterday, analyst Karl Green CFA from RBC Capital upgraded his rating on BNZL stock from Hold to Buy. Green also raised his price target from 3,350p to 4,000p, predicting an upside of 12.6%.
Green believes that Bunzl’s improving earnings outlook, supported by higher profit margins, acquisitions, and share buybacks, is undervalued compared to its peers.
Is Bunzl a Good Share to Buy?
According to TipRanks’ consensus, BNZL stock has garnered a Moderate Buy rating based on six recommendations from analysts. It includes three Buy, two Hold, and one Sell rating. The Bunzl share price target of 3,665.0p is 3.18% higher than the current trading level.
