On Tuesday, Bunzl (OTC:BZLFY) Plc (BNZL:LN) (OTC: BZLFY) received an upgraded stock rating from Citi, moving from Neutral to Buy, while the price target remained steady at GBP37.00.
The decision for the upgrade came after observing the stock's performance in relation to the market. Citi analysts noted that since December, Bunzl's shares have lagged behind the market by approximately 8%.
The upgrade by Citi was influenced by the broader market context, particularly the increasing uncertainty fueled by rising bond yields. This environment prompted analysts to reconsider the stock's rating. Despite the challenges faced in December, when Bunzl warned of deflationary pressures affecting organic growth and margins, Citi now sees a potential estimated total return (ETR) of around 15%.
Back in December, Citi had downgraded Bunzl from Buy to Neutral due to valuation concerns, even as they maintained the same price target. The recent underperformance of the stock, coupled with the current market dynamics, has led to a reassessment of its investment potential.
The upgrade comes with a recognition of the risks that were previously highlighted by Bunzl. The company had cautioned about the impact of deflationary headwinds on its growth and margins, which had been a factor in Citi's initial downgrade.
Bunzl's stock has now been identified as a more attractive buy in the context of the current market situation, according to Citi's analysis. The maintained price target of GBP37.00 reflects the firm's steady outlook on the company's value, despite the past downgrade and the recent market underperformance.
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