Dunelm shares climbed 4% on Thursday after Deutsche Bank upgraded the home furnishings retailer to Buy from Hold and raised its price target by 200 pence to 1,050p.
The upgrade follows a 25% year-to-date decline in Dunelm's shares, which have underperformed the FTSE 350 Retail Index by roughly 30% through September 2. At 08:57 BST, the stock traded at 861.78p, up 3.58% from the previous close of 832p.
Deutsche Bank lifted its fiscal 2027 profit-before-tax forecast by 4% to £219 million, attributing the increase to expected sales growth of about 4% and contributions from new store openings. The bank also raised its price target to 1,050p from 850p, implying around 25% upside from the September 2 closing price.
The firm highlighted Dunelm's long-term ambition to expand its UK market share to 10%, up from 7.9% in fiscal 2025. Deutsche Bank expects the retailer to open nine new stores in fiscal 2027 and three in fiscal 2026, while refurbishing about 10% of its estate and leaving roughly 60% of locations unrefurbished since before the pandemic.
Deutsche Bank also pointed to the retailer's newly launched mobile app as a potential growth driver, with a focus on tracking improvements in customer conversion, spending, product discovery, and data collection. The bank views Dunelm's strategy update scheduled for September 8 as a key near-term catalyst.
