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On Thursday, Deutsche Bank adjusted its outlook for Bunzl (OTC:BZLFY) Plc (BNZL:LN) (OTC: BZLFY) shares, raising the price target to £34.00 from £32.50, while keeping a Hold rating on the stock. The revision reflects an increase in earnings per share (EPS) forecasts by 3-4% due to Bunzl's improved guidance.
The company is expected to benefit from a robust pipeline of acquisitions, which could lead to further financial upsides. Bunzl is also overcoming challenges such as volume softness from its US foodservice redistribution and transitioning of US retail inventory. These factors, coupled with diminishing deflationary pressures, are anticipated to bolster a return to organic sales growth by the end of the year.
The analyst provided a detailed comparison of expected sales growth, noting that the first half of 2023 saw no growth (0%), followed by a 5% decline in the second half. The forecast for the first half of 2024 continues at a 5% decline, but projections turn positive with an estimated 1% growth in the second half of 2024. From fiscal year 2025 onwards, Bunzl is expected to resume its long-term trend of approximately 2.5% annual growth.
The updated analysis by Deutsche Bank suggests that Bunzl is on a path to recovery and growth as it moves past its recent operational difficulties. The improved guidance and anticipated return to organic sales growth are key factors underpinning the revised price target for Bunzl shares.
In other recent news, Bunzl Plc has been the focus of several financial firms adjusting their outlook on the multinational distribution company. RBC Capital upgraded its rating on Bunzl stock from Underperform to Sector Perform, citing expected growth in value-added products and increased mergers and acquisitions (M&A) activity.
The firm also increased its price target from GBP27.00 to GBP33.50. In contrast, CFRA maintained its Hold rating on Bunzl, despite a slight revenue dip of 3.3% year-over-year, while raising the price target to £35.00.
Bunzl's management improved its adjusted operating margin to 8.0% and declared an interim dividend of £0.201, a 10.4% increase from the previous year. HSBC analyst Matthew Lloyd upgraded Bunzl's stock from "Hold" to "Buy", highlighting the company's solid growth and effective M&A strategy. The new stock price target set by HSBC is GBP34.60, an increase from the previous GBP32.55.
Meanwhile, RBC Capital increased its price target for Bunzl from GBP26.00 to GBP27.00, maintaining an Underperform rating. The adjustment comes after Bunzl's recent M&A activities and updated guidance in its second-quarter trading update.
However, RBC Capital expressed caution about Bunzl's prospects due to its heavy exposure to the business-to-business-to-consumer sector and current macroeconomic conditions. These are the recent developments surrounding Bunzl Plc.
InvestingPro Insights
As Bunzl Plc (OTC: BZLFY) navigates through operational challenges and looks towards a path of recovery and growth, recent data from InvestingPro provides additional insights. With a market capitalization of $15.68 billion, Bunzl showcases a stable financial stature. The company's P/E ratio stands at 24.29, reflecting investor expectations of future earnings potential.
Notably, Bunzl has demonstrated a commitment to shareholder returns, having raised its dividend for an impressive 18 consecutive years, a testament to its financial resilience and management's confidence in the business's stability.
InvestingPro Tips highlight that Bunzl's stock has experienced a significant return over the last week, with a 9.12% price total return, indicating strong recent performance in the market. Additionally, the stock is trading near its 52-week high, at 98.86% of this peak value, which may attract investors looking for stocks with upward momentum. For those interested in a deeper analysis of Bunzl's financials and stock performance, InvestingPro offers additional tips, with a total of 11 detailed tips available for investors seeking comprehensive research.
These insights are particularly relevant for investors considering Deutsche Bank's revised price target and hold rating, providing a broader context for Bunzl's financial health and stock activity.
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