Broker tips: Dunelm, Atalaya Mining, Hays

(Sharecast News) - Dunelm's share price plummeted on Thursday after a festive slowdown prompted the homewares retailer to scale back its full-year outlook, but that wasn't enough to prompt broker Shore Capital from changing its 'buy' recommendation on the stock. The retailer said that first-half sales rose by 3.6%, as a 6.2% increase in the first quarter was following by just 1.6% growth in the second, due to tough trading conditions and increased competitor activity from Black Friday to Christmas.

As a result, Dunelm expects full-year pre-tax profit to be at the lower end of the consensus range at £214m-227m.

Nevertheless, according to Shore Capital, the previous announcement by the company that profits would be more weighted to the second half this year means that an estimated 8% decline in first-half profits would still be met with a solid performance in the second half.

"What remains to be seen is whether this December weakness is the start of a tougher market for Home and Furniture or simply a festive blip following the late November Budget. For our part, there are still reasons to be positive on the market outlook," said ShoreCap.

As for Dunelm's valuation, ShoreCap said the stock was trading at 14 times earnings for the 2026 calendar year, a slight premium to the sector at 11-12 times earnings. However, it also said Dunelm's track record of strong shareholder returns meant that the stock remains an above-average retailer and that the premium was justified.

Analysts at Berenberg hiked their target price on copper producer Atalaya Mining from 930p to 1,000p on Thursday, after the group's fourth quarter and full-year operational update a day earlier saw it hit the upper end of its FY25 production guidance range.

In Q4, Atalaya mined 3.9m tonnes of ore, lighter than Berenberg's 4.3mt forecast, although it did come in ahead on mill processing - delivering 4.1mt of ore versus its 3.6mt forecast. Copper grade of 0.33% was slightly below Berenberg's 0.36% estimate, which was greatly offset by improved recoveries of roughly 83.9%, resulting in a record annual mill throughput of 16.6mt.

Copper production of approximately 11,500 tonnes in Q4 brought full-year production to 51,100 tonnes in FY25, beating Berenberg's 50,700 tonnes estimate and coming in at the top end of Atalaya's FY25 guidance range of 49,000-52,000 tonnes. Q4 sales of 11,800 tonnes were also ahead of its 11,100 tonnes forecast, as Atalaya continued to benefit from rising copper prices.

The German bank, which has a 'buy' rating on the stock, also noted that Atalaya had provided FY26 guidance for its Proyecto Riotinto project in Spain, with the group expecting to mine 15.5m-16m tonnes of ore, while waste mined at Cerro Colorado was pegged to be 38m-44m tonnes, ore processed was expected to come in at 15.5m-16m tonnes, and copper grade was seen at 0.38-0.41%. Overall copper production was also expected to be 50,000-54,000 tonnes, with H226 production forecast to be roughly 10% higher than H126.

"We update our model for the Q4 results and tweak our estimates to reflect the FY26 guidance. We value Atalaya using a blended 1.33x NAV and 9x NTM EBITDA (previously 8x EV/EBITDA) to reflect premium valuations being afforded to copper names," said Berenberg.

RBC Capital Markets cut its price target on Hays on Thursday to 65p from 75p following the recruiter's second-quarter trading update a day earlier.

The Canadian bank said it was taking a more cautious view of near-term market recovery for Hays, noting that only about 15% of its countries by net fees are currently growing.

"Following Hays' fiscal Q2 (calendar Q4) trading update and commentary from key peers, we take down estimates to reflect ongoing challenging conditions, particularly in key Northern European markets, and assume that meaningful cyclical recovery is pushed out to calendar 2027," it said. "Though there is cautious optimism around German fiscal stimulus kicking in later this year, confidence in the UK and France (circa 25% of group fees combined) is increasingly undermined by political dysfunction, and the whole region continues to suffer from counterproductive net zero zealotry and excessive regulation, in our view."

RBC's earnings per share estimates for FY26, FY27 and FY28 fall by 9%, 30% and 33% respectively, with net fee cuts of 5% for FY26 and 12% for FY27 compounding the EBIT reductions as, it thinks, Hays will seek to preserve capacity as best it can.

RBC maintained its 'outperform' rating on the stock, stating it remains too cheap to ignore.

Reporting by Iain Gilbert at Sharecast.com