Canaccord Genuity raises target price on Dunelm
By Iain Gilbert
Date: Friday 19 Jul 2024
(Sharecast News) - Analysts at Canaccord Genuity raised their target price on home furnishings retailer Dunelm 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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