Cantor Fitzgerald

Caroline de La Soujeole Comments: The Expert View: M&S, Bunzl and ABF

February 26, 2013, Citywire.co.uk

Cantor Fitzgerald downgrades Bunzl to 'sell'

Cantor Fitzgerald analyst Caroline de La Soujeole has downgraded outsourcing group Bunzl (BNZL.L) from 'reduce' to 'sell' in spite of a strong set of annual results following a strong few months for the shares.

2012 results showed a 6% rise in sales to to £5.4 billion, and adjusted pre-tax profit was up 8% to £323.9 million, ahead of de La Soujeole's top-of-the-range estimate of £318.2 million.

However, the 8% outperformance of the shares over the past month relative to the sector leaves them looking pricey, according to the analyst.

'Whilst Bunzl's business model exhibits good defensive qualities, we do not feel that its current growth prospects warrant a premium valuation,' she said. 'In addition, with more than 50% of group sales generated from North America, Bunzl's reported results could be adversely affected by the weakening sterling. We also believe that Bunzl's balance sheet offers less flexibility with net debt to equity at 84%.'

Shares in the group closed at £12.20 on Monday, down 0.4p or 0.03%.