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On Wednesday, Stifel analysts upgraded Bunzl (OTC:BZLFY) Plc (BNZL:LN) (OTC: BZLFY) stock rating from Hold to Buy, adjusting the price target to GBP35.00 from the previous GBP34.70. The upgrade reflects the firm’s positive outlook on the company’s current trading trends, strong balance sheet, and resilient product offerings. The analysts highlighted Bunzl’s valuation, noting it trades at a discount of more than 15% compared to its historical averages, which presents an attractive entry point for investors. Currently trading at $18.86 with a market capitalization of $12.5 billion and a P/E ratio of 19.8, InvestingPro analysis suggests the stock is fairly valued based on its proprietary Fair Value model.
The analysts pointed out that approximately 75% of Bunzl’s sourcing is domestic, which they believe could mitigate the potential impact of any tariffs that might be introduced by the Trump administration. Regarding the company’s trading performance, Stifel anticipates that pricing has reached a stable point and expects it to become more inflationary throughout the fiscal year 2025. This pricing stability, along with an anticipated improvement in volumes, is expected to contribute to positive organic growth for Bunzl this year. According to InvestingPro data, the company has maintained dividend payments for 46 consecutive years and currently offers a 3.5% dividend yield, demonstrating its commitment to shareholder returns.
Bunzl’s financial position allows for significant strategic moves, with the analysts forecasting a leverage ratio of around 1.6 times at the end of fiscal year 2025, well below the company’s target leverage level of 2 to 2.5 times. This suggests that Bunzl has over GBP900 million in headroom for mergers and acquisitions (M&A). Stifel also notes that Bunzl is in a good position to maintain its capital allocation strategy through the end of fiscal year 2027, with an estimated GBP700 million per annum earmarked for M&A activities and share buybacks.
The report concluded with Stifel making minor adjustments to their estimates following Bunzl’s financial results for the fiscal year 2024. The analysts’ commentary underscores their confidence in Bunzl’s capacity for sustained growth and the potential for shareholder returns through strategic investments and share repurchases. With an expected EPS of $2.60 for FY2025 and a strong five-year track record, the company maintains a solid financial foundation for future growth.
In other recent news, Bunzl Plc has seen several significant developments. Barclays (LON:BARC) upgraded Bunzl’s stock rating from Equalweight to Overweight, raising the price target to GBP36.50, citing an upward trend in volumes and a more stable pricing environment expected in 2025. Deutsche Bank (ETR:DBKGn) also upgraded Bunzl from Hold to Buy, increasing the price target to GBP34.75, highlighting the company’s consistent profit growth and potential for organic growth resumption in 2025. Bernstein SocGen adjusted its price target for Bunzl to GBP37.00 from GBP40.00 but maintained an Outperform rating, noting the company’s strategy for expanding its EBITA margin and potential EPS momentum. Citi upgraded Bunzl from Neutral to Buy, maintaining a price target of GBP37.00, after observing the stock’s underperformance relative to the market and recognizing potential for a 15% estimated total return. These recent developments reflect a generally positive outlook from analysts, who emphasize Bunzl’s strategic positioning and potential for growth amid current economic conditions.
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