Broker snap: Deutsche Bank lifts target for Bunzl on potential M&A

17th Sep 2013 10:02

Deutsche Bank has raised its target price for distribution and outsourcing group Bunzl by over a fifth to include the benefit of potential merger & acquisition (M&A) activity.The target price has been raised by 22.9% from 1,160p to 1,426p."We do not forecast earnings from future M&A, but have now incorporated an M&A benefit in our target price," the German bank said.Deutsche Bank reckons that future M&A could add 111p to its underlying target of 1,315p."Bunzl's share price will likely continue to be supported by future M&A, as well as a single-digit organic growth and FX movements. We see Bunzl as a cash-generative compounder but with little upside to our target price we retain our 'hold' recommendation."On the new target price, the bank said that Bunzl would trade at 17 times 2014 earnings excluding future M&A earnings, or 15 times all-in.The stock was up 0.81% at 1,376p by 11:00 on Tuesday.BC