JPMorgan upgrades Bunzl, hikes price target

JPMorgan Cazenove upgraded Bunzl on Monday to ‘overweight’ from ‘neutral’, lifted the price target to 3,375p from 3,250p and placed the shares on ‘positive catalyst watch’ into the first-quarter trading update on 26 April.

JPM said that following the company’s FY22 results and London roadshow, it is re-vising the story as it finds itself positive for 2023 relative to its wider sector. The bank highlighted three key positives.

"1) Pricing remains positive, particularly into H1-23, but also likely for 2023 overall, in our view," it said.

"2) Leverage finished 2022 at a record-low level, 1.2x under the covenant definition (1.7x including leases and deferred M&A consideration). 3) The valuation has normalised relative to the market and we see some upside, catalysed by earnings momentum."

In its 2023 estimates, JPM is 4% above company-compiled consensus at EBITA and EPS. Compared to current Bloomberg consensus EPS, JPM is 3% above.