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(Sharecast News) - Exane BNP Paribas upgraded Bunzl to 'outperform' from 'neutral' on Tuesday and hiked the price target to 3,000p from 2,450p as it said the market has priced the company for permanent damage, but overshot.
Exane BNPP said it met with Bunzl's chief executive last week and the meetings gave it increased confidence that the remedial actions and operational changes implemented in North America are bearing fruit.
"Execution issues in North America appear remedied - confirmed in our meetings with the CEO last week - and this de-risks the earnings base just as plastics-led inflation begins flowing through Bunzl's fast-repricing SME model," the bank said.
"On circa 9% free cash flow yield and priced for just 1% LT annual profit growth, the shares look too cheap."
It added: "The rebalancing of central-versus-local decision-making, leadership changes now bedded in, the more disciplined own-brand approach that has stopped alienating branded suppliers, and the pace of warehouse consolidation leave us more confident that execution problems of 2025 are now in the rear-view mirror."
At 1340 BST, the shares were up 2.6% at 2,558p.
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