GCICanaccord Genuity raises target price on Dunelm
Analysts at Canaccord Genuity raised their target price on home furnishings retailer from 1,250.0p to 1,325.0p on Friday, stating the firm's "strong finish" to FY24 had driven a "small" earnings beat.
Canaccord Genuity said Dunelm's FY24 trading update showed that it had delivered "a strong final quarter" with sales rising by 5.0%, up from Q3's 2.6% growth. Dunelm's Q4 performance drove an increase in overall group FY24 sales of 4.1% to £1.7bn across the year ended 29 June, approximately 55% higher than FY19 pre-pandemic levels.
"Importantly, the growth has been largely volume-driven, and management is confident the group outperformed the wider market and delivered further share gains in what remains a largely fragmented UK homewares market," said Canaccord. "Dunelm has ~8% share of the UK homewares and furniture market worth c.£24bn. A stronger-than-expected FY24E gross margin outcome has helped to drive a small beat to both our own and consensus pre-tax profit expectations."
Prior to the update, consensus pre-tax profit estimates stood at £200.0m for FY2 but the Canadian bank said it has now "duly upgraded" its forecast by 3% to £202.0m, with a 2% upgrade to FY25/26 forecasts.
"We continue to believe that Dunelm offers an attractive growth opportunity with significant share gain opportunities in under-penetrated categories coupled with further UK store expansion potential," concluded Canaccord.
Reporting by Iain Gilbert at Sharecast.com
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