RBC Capital Markets raises target price for Bunzl
Analysts RBC Capital Markets raised their price target on the distribution company Bunzl from 2,270.0 p to 2,450.0 p on Monday following the company’s “solid” results in the first half of the year.
RBC said it chose to update its earnings per share estimates to better capture recent mergers and acquisitions, currency movements and “more resilient” underlying earnings assumptions in the second half of the year.
As a result, its earnings per share estimates rose 7.5% for 2021 and 2.5% for 2022, further aligning the Canadian bank with consensus estimates.
However, RBC also retained its “sector performance” rating on Bunzl, reflecting long-term concerns about structural pressures on margins, constraints to M&A-induced growth and limited disclosure, in the face of a “ undemanding valuation “and” relatively resilient “earnings and cash flow. profile.
“Bunzl is trading at a P / E of 18x against our revised EPS estimates for fiscal years 21E and 22E and an EV / EBITA multiple of just over 14x for both years, which is not demanding in the context of the distribution sub-sector and the broader business services sector, “RBC analysts said.
“We are increasing our DCF-derived PT to 2,450.0p (vs. 2,270.0p), reflecting increases in estimates, as well as the carry forward of the time adjustment coefficient, and maintain a ‘sector performance’ rating on the actions.”