Broker tips: Dunelm, Premier Foods, Trustpilot

(Sharecast News) - Dunelm slumped on Monday after RBC Capital Markets downgraded shares of the homeware retailer to 'sector perform' from 'outperform' as it said the valuation was looking more up with events now. "We view Dunelm as a high quality business. It's cash generative, has executed well in recent years and expansion potential has stepped up," RBC said. "But we think this is now more reflected in its valuation."

The Canadian bank noted that the stock was up more than 20% in the last three months and said investors will still have to wait until early 2026 for gross margin tailwinds and further additional cash returns.

"We now see less upside relative to others in the sector, especially in the context of softer housing market trends. Hence, we move to sector perform," said RBC, which kept its 1,175.0p price target on the stock.

Analysts at Berenberg raised their target price on food manufacturer Premier Foods from 250.0p to 270.0p on Monday as the company's equity thesis rebrand continues.

Berenberg said the evolution of the Premier Foods equity thesis had given investors a reason to question what lies ahead.

"Premier Foods' history has been characterised by significant debt burden due to substantial bank debt and a large pension deficit," said Berenberg.

However, the analysts stated that Premier Foods has now moved past these issues, noting that its leverage has "markedly diminished" and said its cashflow generation has "expanded materially".

"Investors have rightly shifted their focus from the company's de-leverage potential and turnaround ability to what a likely use of Premier Foods' excess capital may be," said the German bank.

Berenberg also reiterated its 'buy' rating on the stock.

Trustpilot tumbled on Monday as Panmure Liberum initiated coverage of the stock with a 'sell' rating and 200.0p price target.

Panmure said Trustpilot "finds itself in 2025 at the foothills of a complex multi-year business transition".

"Facing into a high cost of growth, management is pursuing Enterprise clients to reduce underlying customer churn and access larger brand investment - yet to do so may require them to enter the more competitive customer experience market," it said.

Panmure said the current valuation assumes perfect execution over a multi-decade time horizon despite near-term macro risks and medium-term business profile uncertainty.

"Deteriorating US macro will further test the business model's cyclicality in 2025," it said. "We see the risk/reward equation skewed to the downside and initiate with a sell recommendation and a 200.0p target price, representing 4.1x FY25E EV/sales and 43.5x EV/EBIT, although we acknowledge 15.5% modest downside for a stock with this growth and volatility profile."