Goldman Sachs has upgraded Bunzl plc (LON:BNZL) from Sell to Neutral, pointing to a more balanced risk/reward profile after a steep share price drop this year. The bank set a 12-month price target of 2,510p, implying about 5% upside from current levels, according to Reuters.
Bunzl, the British distribution and outsourcing company, has seen its stock fall roughly 30% in 2025, weighed down by an April profit warning that lowered growth and margin expectations for next year. That warning was tied in part to weakness in its North American operations, which generate around 60% of group revenue, as reported by The Times.
Despite the downgrade in guidance, Goldman Sachs noted that Bunzl's first-half results came in broadly in line with expectations and that the resumption of its share buyback program has eased some near-term risks around earnings and leverage. The bank now expects EBITA margins of 7.6% in 2025, down from 8% in 2024, but sees scope for gradual improvement in the following years.
At current levels, Bunzl trades at about 13 times Goldman Sachs' estimated 2026 earnings, compared with a historical mid-cycle average multiple of 17. The firm argued that the combination of a discounted valuation and Bunzl's resilient business model makes the shares less risky than earlier in the year.
