RBC bumps up target price for Bunzl but stays at 'underperform'
Analysts at RBC bumped up their target price for shares of distribution and outsourcing outfit Bunzl but stayed at 'underperform' on the shares in expectation of "structural pressure" on its end markets.
Their estimates for the company's earnings per share in 200-21 were revised higher by 7.0% and 6.0%, respectively, on the back of its better-than-expected margins in the back half of 2019 and recently announced mergers and acquisitions.
That led them to raise their target price for the shares from 1,700.0p to 1,800.0p.
However, due to the structural pressures anticipated in Bunzl's end markets, the question marks around its pricing power with large customers, the firm would become increasingly reliant on M&A which would place further pressure on its margins.