Deutsche Bank turns bullish on Dunelm ahead of strategy revamp Proactive uses images sourced from Shutterstock
Dunelm Group PLC (LSE:DNLM) secured a firm vote of confidence from Deutsche Bank on Thursday, as the broker upgraded the retailer on the expectation of accelerating earnings growth.
The shares jumped 4% to 862p as Deutsche Bank lifted its stance to ‘buy’, arguing the market is giving little credit to the homeware chain’s strategic upside.
At the heart of the bullish turn is an expected strategy presentation, where management is tipped to unveil a revamped digital offering alongside increased store investments.
Those increased store investments and digital plans are designed to drive robust operational growth as the homeware specialist steadily progresses towards capturing a 10% slice of the wider market.
That underlying resilience is anchored by strong cash conversion of around 70% and an appealing 9% free cash flow yield.
Alongside the upgrade, the investment bank acknowledged that recent profit warnings had raised doubts across the City regarding medium-term margins and consistent market share gains.
Despite those historical hiccups, Deutsche Bank analyst Benjamin Yokyong-Zoega lifted his financial year 2027 earnings estimate by 4% to reflect the rewards of faster refits and accelerated store openings.
Trading at a price-to-earnings multiple of 10.3x, the stock currently offers investors a 25% upside from the previous close of 832p to a newly raised target of 1,050p.
Looking ahead, the broker noted that the imminent strategic update will be key, but it already sees clear upside in existing operations and a resilient cash profile.