Top Picks - Europe: Top Picks - Europe - 3Q26

Research evidence excerpt

Top Picks - Europe: Top Picks - Europe - 3Q26

ddressed and there are positive signs of with higher valuation multiples or poorer integration management. We

better trading in this business. would expect the group to be a mild beneficiary of modest inflation but see

mild downside risk from product deflation. Broad-based competitive

• A beneficiary from an end of product price deflation – c.2/3 of costs are pressure could result in lost market share or a reduction in profits. Any

plastic, cleaning and paper products and recent years have seen deflation business disruption from operational failure could impede short-term

in these products, that has made it hard for the business to pass on its own returns and the group’s reputation.

opex cost inflation in pricing. 2026 started with a more neutral product 660 3,000

price outlook that has been boosted in H1 aided by the energy supply 640 2,500

shock. Even as the recent energy supply shock eases, and prices again 620

normalise, the business is still in a much stronger position than recent 600 2,000

years. 580 1,500

• Sensible guidance plus accretive capital deployment potential – North 540 1,000

America is >50% of revenue (predominantly grocery and foodservice) and 520 500

500 so the business faces into a subdued end-consumer backdrop, but the

480 0

group has started the year well (H1 underlying +3% that was volume led) 25 25 25 25 25 25 26 26 26 26 26 26

and recently upgraded guidance (for modest underlying growth with some

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun margin reduction) could still prove conservative. Accretive acquisitions or

buybacks are also possible with ND/EBITDA falling below its 2-2.5x target

SXXP Index BNZL

range in FY26.

Source: Deutsche Bank, Bloomberg Finance, LP

Deutsche Bank Research 13