Analyst Grace Gilberg from Jefferies reiterated a Hold rating on Dunelm Group (DNLM – Research Report) and keeping the price target at p1,095.00.
Grace Gilberg’s rating is based on several factors that contribute to a balanced outlook for Dunelm Group. The company reported a significant improvement in revenue growth in Q3, with a 6.3% increase, which is a notable acceleration from the previous quarter. This growth was supported by favorable weather conditions and weaker comparative figures from the previous year. Despite this positive momentum, there was no corresponding upgrade in the full-year profit before tax expectations, which might have tempered the enthusiasm for a stronger rating.
Additionally, Dunelm has shown progress in market share gains and digital penetration, with a notable increase in Click and Collect sales and advancements in AI-enhanced searches. The opening of the 200th store and the acquisition of Home Focus also highlight the company’s expansion efforts. However, the recent rally in the stock price, driven by anticipated earnings upgrades and a recovery from earlier share price declines, suggests that the current valuation already reflects these improvements. As a result, Grace Gilberg maintains a Hold rating, indicating a cautious optimism while acknowledging the potential for future growth.