RBC Capital downgrades Bunzl to ‘underperform’

RBC Capital Markets downgraded Bunzl on Wednesday to ‘underperform’ from ‘sector perform’ and cut the price target to 2,550p from 2,850p as it said deflationary forces are building.

"In light of the sharp declines in raw material pricing which we believe underpins the bulk of Bunzl’s product portfolio, we cut our organic revenue growth assumptions and now assume a modest organic decline in FY24, with limited recovery in FY25," RBC said.

"Bunzl’s share price has disconnected from a composite index of the global chemicals and paper & packaging sectors to which it has historically been highly correlated, and we see scope for both consensus earnings pressure and valuation multiple compression."

At 1005 BST, the shares were down 1.9% at 2,819p.