Shares in Bunzl PLC (LSE:BNZL) rose 1% to 2,976p on Wednesday, bucking a wider market decline, after Stifel upgraded the stock to ‘buy’ from ‘hold’, citing improved trading momentum and a resilient business model that should hold up well even if Donald Trump reintroduces import tariffs.
The broker raised its target slightly to 3,500p and said the current share price offered an “attractive entry point” given it trades at a 15% discount to its ten-year average.
Bunzl sources around 75% of its products domestically, which Stifel says would help cushion any impact from US-China trade tensions or broader tariff policies.
The FTSE 100 supplier of everyday non-food products to businesses has seen some stabilisation in pricing and a modest recovery in volumes, which Stifel expects will lead to a return to organic growth this year.
Its robust free cash flow and strong balance sheet also give it room to pursue further acquisitions or buybacks, with £900 million of firepower available.
Margins hit a record 8.3% last year, supported by a greater focus on own-brand products, especially in North America. The group has committed to spending £700 million a year on deals and buybacks through to the end of 2027. Stifel said this would continue to support the shares.
While cost pressures remain, particularly in the UK and continental Europe, Bunzl is making operational changes such as warehouse consolidation and digitisation that should help offset inflation, analysts said.
It’s also benefiting from improving conditions in its chemicals and plastics input costs.
“Bunzl is a quality compounder,” Stifel said in its note, arguing that the stock’s underperformance over the past six months had created a buying opportunity.
Despite broader macro uncertainty, it added, the company’s defensive characteristics and end-market diversity make it well positioned to deliver steady returns.