Deutsche Bank has upgraded Bunzl PLC (LSE:BNZL) to 'buy' from 'hold', backing the distribution group to return to organic growth next year as volumes recover and pricing pressures begin to ease.
The bank lifted its price target from 3,400p to 3,475p.
Analyst David Brockton said the company remained one of the most consistent profit generators in the business services sector, and the recent pullback in its share price offered a timely buying opportunity.
Volumes at Bunzl have recently turned positive after a period of correction, and while deflation continues to weigh on performance in the near term, the outlook is improving.
Prices for key materials like plastic resin and paper are stabilising, and some suppliers have already started to raise prices to offset rising costs.
Brockton added that tariffs could pose a risk, but noted that their immediate effect may be inflationary - which could help margins if customer demand holds up.
Bunzl shares were up 1% at 3,008p following the upgrade.