RBC downgrades Dunelm, shares slump

(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 is 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 bank noted that the stock is 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 1,175p price target.

At 0905 BST, the shares were down 3.5% at 1,151p.