Bunzl's Outlook Upgraded
Bunzl lifts 2026 revenue outlook; North America and acquisitions drive strong gains
Anonymous
Key Points
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Bolt-on acquisition of Scientifix Group in Australia, a life sciences and biotechnology distributor generating about AUD 18 million in annual revenue, strengthening Bunzl's healthcare footprint and expanding opportunities in a fragmented market.
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In the first half, Bunzl expects adjusted operating profit to grow alongside revenue, signaling improving operational performance even as macro/geopolitical pressures weigh on margins.
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Analysts’ view on BNZL remains positive: a Buy rating with a target around £3,000; Spark also rates the stock as Outperform, noting a mid-teens P/E and roughly 3.3% yield.
Bunzl PLC upgraded its 2026 revenue outlook on June 23 after a stronger-than-expected first half, with total revenue growth of about 4% and underlying organic growth of roughly 3%, according to MarketScreener. Shares rose as much as 2.9% on the news, reflecting investor relief after a bruising 2025 that saw a major profit warning and a sharp drop in operating margins.
The update lands as activist investor Elliott Investment Management, which has built a stake of just under 5% in the FTSE 100 distributor, pushes for a strategic review and a buyback worth roughly £830 million, according to Bloomberg. Bunzl's management says the business is proving its resilience. Elliott says it is deeply undervalued.
North America Turnaround Drives the Upgrade
North America is the engine behind Bunzl's recovery. The region's distribution business lost significant market share in 2025 after the company tried to centralize operations, stripping local managers of pricing power. CEO Frank van Zanten reversed course, restoring local agility. The result: strong volume gains in the first half of 2026, according to LSE.
Van Zanten said the North America Distribution business "has achieved the good operational progress we had expected." Geopolitical tensions also helped. Product costs rose mid-year, and as a cost-plus distributor — meaning Bunzl passes price increases on to customers — higher costs translated directly into higher revenue. Management cautioned this tailwind may not last.
Elliott Demands a Break-Up or a Massive Buyback
Elliott Investment Management argues that Bunzl's North American arm is undervalued by 40–50% compared to US-listed peers. The hedge fund wants Bunzl to either spin off or sell its North American operations, or return roughly £830 million to shareholders through a share buyback equal to 10% of its market cap, according to Bloomberg.
Bunzl's market cap has hovered between £8.2 billion and £8.5 billion in June 2026. Elliott's play is a classic "valuation gap" strategy: it argues that listing on the London Stock Exchange drags down the multiple investors apply to Bunzl's US cash flows. Management disagrees, saying North America funds high-growth acquisitions in Europe and Asia-Pacific, and a split would destroy synergies.
Scientifix Deal Deepens Bunzl's Healthcare Push
In April 2026, Bunzl completed the acquisition of Scientifix Group in Australia, a life sciences and biotechnology distributor generating about AUD 18 million in annual revenue. The deal is a bolt-on — small by design — but it signals a deliberate shift toward higher-margin healthcare distribution, according to MarketScreener.
Bunzl has made healthcare and life sciences a growing priority as foodservice and grocery distribution face more volatility. The Scientifix acquisition expands Bunzl's footprint in a fragmented Australian market where few national players exist. It is the kind of deal Bunzl has built its reputation on: steady, compounding, low-risk growth.
Margins Under Pressure Despite Positive Full-Year Outlook
Despite the upgraded revenue guidance, Bunzl warned that full-year margins will be slightly lower year-on-year. Higher fuel, freight, and labor costs are squeezing the bottom line even as top-line growth accelerates. Adjusted operating profit is still expected to grow alongside revenue in the first half, according to MarketScreener.
Analysts broadly back the stock. BNP Paribas rates it Outperform with a price target of £3,000. Shares opened at 2,506p on June 23, up 1.7% on the day. The mid-teens price-to-earnings ratio and a dividend yield of roughly 3.3% keep income investors interested. But the margin squeeze and Elliott's pressure mean the board faces a defining set of choices in the months ahead.
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