Deutsche Bank upgrades Dunelm to ‘buy’, shares spark.
Dunelm shares sparked on Thursday after Deutsche Bank upgraded the homeware retailer to ‘buy’ from ‘hold’ ahead of its strategy update.
Dunelm Group
03 September 2026 12:38:56
Source: Sharecast
DB said it reckons management will outline a revamped digital offer and increased store investment to drive accelerating earnings growth as the company progresses towards 10% market share.
The bank, which hiked its price target to 1,050p from 850p, said profit warnings this year have raised doubts over mid-term margins and the consistency of market share gains but it likes the underlying business model.
Deutsche noted that cash conversion is strong at around 70% with a circa 9% free cash flow yield in Cal-27E. The bank lifted its FY27 pre-tax profit estimate to £219m from £210m, driven by stronger sales and stable pre-tax profit margin.
DB pointed out that the shares are down around 25% year-to-date, underperforming the FTSE 350 Retail Index by approximately 30%. "Trading at a 10.3x P/E, we think little credit is being given to the earnings upside potential from faster store openings and refits," it said.
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