Shares in furniture retailer Dunhelm soar after broker upgrade
Shares in home furnishings retailer Dunelm rocketed over 14 per cent after analysts at Peel Hunt upgraded their recommendation to buy.
Peel Hunt said there are “clear catalysts for recovery” for the company next year, citing better brand awareness and improving online performance.
The broker said Dunelm’s performance last financial year had been negatively affected by the integration of Worldstores, which the retailer bought out of administration in 2016.
But Peel Hunt analysts said Dunelm had stepped up its performance in the first quarter.
“After a series of downgrades driven largely by the acquisition of Worldstores and the integration process, Dunelm is sharpening up its act under new chief executive Nick Wilkinson and focusing on the core values that made the business so successful in the first place,” Peel Hunt said in a note to clients.
The broker also forecast a return of special dividends at the end of the financial year. It said this could double the current yield of roughly five per cent.
In its full-year results Dunelm said the integration of Worldstores had put an £8.4m dent in the company’s profits, but it reported a 37.9 per cent growth in online sales during the period.
Shares in Dunelm closed at 618.5p. Peel Hunt lifted its target price for the company to 750p.