Barclays cuts Bunzl to 'equal weight' on plastic shift

Barclays cut its rating on Bunzl shares to 'equal weight' and reduced its price target on the distribution and packaging group, citing changing post-pandemic trends and a shift away from plastic packaging.

2020 was a strong year for Bunzl and disposable products during the Covid-19 crisis but the opposite could be true in years ahead, Barclays said.

Post-coronavirus trends and a move away from single-use plastics by consumers could hit the FTSE 100 group, the bank said. Single-use plastics make up about 15% of Bunzl sales and the company has benefited from high demand for items such as sanitisers, gloves and face shields during the crisis.

"We conclude both [trends] could weigh on Bunzl's structural organic story," Barclays said in a note to clients. "The uncertainty this creates for the incremental buyer means we see greater value or structural growth opportunities elsewhere in the sector."

Barclays cut its rating on Bunzl shares from 'overweight' and reduced its price target to £23.50 a share from £27.50. Bunzl shares fell 1.5% to £24.10 at 11:09 GMT.