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(Sharecast News) - Analysts at Canaccord Genuity lowered their target price for Dunelm on Thursday, cutting it from 1,240p to 1,185p, although the broker maintained its 'buy' rating as it updated forecasts following the group's new three‑year growth plan.
Canaccord Genuity said Dunelm's Winning Hearts & Homes strategy was a "sensible and credible" evolution of its existing model, aimed at reaccelerating sales growth through stronger customer engagement, improved merchandising, further omnichannel investment and optimisation of the store estate.
While the plan requires a notable step‑up in investment over the next three years, Canaccord said the financial targets were realistic and supported by a significant cost‑saving programme.
Canaccord said Dunelm had delivered a solid FY26 performance, with sales up 3.1% to £1.83bn, gross margins rising to 52.5%, and pre‑tax profits steady at £211m, in line with expectations. Digital penetration increased to 42%, and free cash flow of £155m supported higher ordinary and special dividends.
The Canadian bank stated the strategy will require around £125m of incremental capex between FY27 and FY29, plus £30 to £40m of non‑recurring investment costs. Canaccord expects this investment phase to weigh on near‑term earnings and likely pause special dividends, though it reckons ordinary dividend growth should continue. FY27 guidance points to adjusted pre-tax profits broadly flat year‑on‑year.
Canaccord trimmed its FY27 and FY28 profit forecasts by 2% and 1%, respectively, prompting the reduced target price. Even so, it maintained that Dunelm remains well placed to take further market share in a fragmented sector.
Berenberg initiated coverage of McBride on Thursday with a 'buy' rating and a 275p price target, saying the household‑products manufacturer had rebuilt margins and its balance sheet to the point where a more optimistic growth outlook was now emerging.
Berenberg said McBride's renewed strategic focus had driven a "much‑improved" operational and financial profile, supported by rising private‑label penetration across Europe and Asia. Private‑label now accounts for around 36% of the household cleaning market, helped by stronger value propositions, retailer push from discounters, shrinkflation in branded goods and higher post‑pandemic hygiene spend.
The German bank said McBride was well positioned in its core Western European markets, with scale and deep retailer relationships supporting market‑share gains through cross‑selling and new contract wins. It also expects growing opportunities in contract manufacturing, citing the recent £51m Vestacy partnership as an example of long‑term, stable revenue streams.
Berenberg also noted that a stronger balance sheet has enabled a £40m reduction in net debt, leverage falling from 4.9x to 1.2x, the reinstatement of dividends and a £20m buyback. Berenberg, which higlighted that its 275p target price implies around 50% upside, stated this now provides capacity for further M&A as McBride continues to act as a consolidator in a fragmented European market.
Reporting by Iain Gilbert at Sharecast.com
