Bunzl PLC (LSE:BNZL) offers "excellent scope" to drive further steady forecast upgrades in the second half of the year and into next, said Shore Capital ahead of half-year results from the FTSE 100 group in week's time.
"With its strong management culture, resilient business model to economic cycles (as demonstrated in the past), positive cash generation credentials and ability to source, transact and integrate acquisitions into the group, prospects to us continue to look assured," said analyst Robin Speakman in a note on Tuesday.
The main focus from investors at the results is likely to be on the ongoing impact of inflationary forces, energy costs and logistics, and the consequent impact on profit margins.
Discussions with management of the distributor of workplace essentials have revealed their ongoing confidence in meeting challenges and the opportunities for the group also being thrown up, Speakman said.
The recent inflation comes after disinflation over the past decade, which had come with its own margin implications.
"So, inflation has perhaps relieved some cost pressures with client pricing agreements on cost inputs in place," said the analyst.
Bunzl also continues to expand its footprint through acquisitions, with circa £225mln spent so far in the financial year.
Shore Cap is looking for organic revenue growth of roughly 9%, with acquisitions and positive currency effects driving this up to around 16% on a reported basis to circa £5.71bn, with adjusted profit before tax of £365mln and a 5% hike to the interim dividend to 17p.
On these forecasts, Shore Cap sees fair value at 3450p, over 12% upside to the latest close, and reiterated its 'buy' rating.