No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - JPMorgan upgraded homeware retailer Dunelm on Wednesday to 'overweight' from 'neutral' as it said the risk has shifted to the upside.
The bank noted that Dunelm has had a somewhat rocky start to 2026, with disappointing second-quarter sales, and concerns over H1/H2 phasing sending the stock down 15% year-to-date. This has left the stock trading on a CY 26 price-to-earnings of about 12x, in line with the long-run sector average.
"This compares to Dunelm historically trading at a double digit percentage premium," JPM said. "While the white space opportunity is now more muted, the premium also reflected the market share opportunity more broadly and the high quality characteristics of the stock.
"Indeed, Dunelm has one of the highest free cash flow yields in our coverage at circa 11%."
JPM said expectations are now somewhat re-based.
"Current trading has improved. Incremental change from new CEO, Clo Moriarty is already landing. We therefore think that the risk has now shifted to the upside and we upgrade," it said.
The bank cut its price target to 1,225p from 1,240p, driven by changes to its forecasts.
JPM reduced its FY 26 pre-tax profit forecast by 3% to reflect the weaker-than-expected Q2 sales performance reported in January. "We now look for FY 26 PBT up 1% year-on-year to 213m, broadly in line with consensus for 214m," it said.
At 1107 GMT, the shares were up 0.4% at 963p.
The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.