UBS upgrades Dunelm as it eyes growth from foray into furniture
Analysts for UBS have upgraded its rating for homeware retailer Dunelm to ‘buy’ from ‘neutral,’ and said its push beyond homeware into furniture would bring growth.
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16:40 26/04/24
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Shares in Dunelm were trading up by 1.68% to 910p at 1443 BST. UBS has upped its price target on the stock to 1020p from 905p.
In a note UBS analyst Andrew Hughes said UBS increased its 2015 profit before tax estimate by 1%, while lifting its 2016 forecast by 2%.
UBS said Dunelm’s push into the furniture market would give it another leg of growth above the 30% upside still to the 200 store target and the boost from multi-channel investment.
“Following two years of heavy cost investment, especially in the multi-channel offer, we now think estimates have stabilised and that the risk is now to the upside,” Hughes said.
UBS said while operating expenses had been a key drag, costs to sales ratios were likely to stabilise, and its estimates could be too conservative given signs of stronger housing and online growth should support like for like sales.