- Shore Capital sticks with Dunelm ‘Hold’ rating
- Berenberg ups target price for Hollywood Bowl
- Shore Capital downgrades Pets at Home
Shore Capital sticks with Dunelm ‘Hold’ rating
Shore Capital has reiterated its ‘Hold’ rating for retailer Dunelm LON:DNLM following Q1 numbers out last week showing total sales up 9% with the digital channel accounting for 35% of that. The majority of the uptick was reported as being driven by volume, whilst currency tailwinds and falling freight rates also served to boost gross margins by 120bps, in line with longer term expectations. Given the economic backdrop these numbers were encouraging and management are confident that there’s further market share to be obtained.
Dunelm shares were trading at 999p at the time of writing, up 0.8% this year and up 19% over the last 12 months.
Berenberg ups target price for Hollywood Bowl
Berenberg has raised its target price for Hollywood Bowl LON:BOWL from 370p to 400p and reiterated its ‘Buy’ rating. This follows a trading update for the leisure business last week noting excellent financial and operating performance in both the UK and Canada with customer demand remaining strong. Favourable weather conditions in the UK school holidays were seen as supportive although it’s worth noting that country revenues only rose by 4%, so lagging inflation significantly. Whilst that certainly helps with the value proposition, it will impact margin. Plans are to declare a dividend of at least 7p per share, with FY results due in December.
Hollywood Bowl shares were trading at 248p, up 2.7% this year and 4.4% over the last 12 months.
- Companies Reporting: Dunelm, Fevertree, Trainline
- Companies Reporting: Hollywood Bowl, British American Tobacco, WH Smith
- Companies Reporting: Pets at Home, Salesforce, Dr Martens
Shore Capital downgrades Pets at Home
Shore Capital has downgraded retailer Pets at Home LON:PETS from ‘Buy’ to ‘Hold’ this week amid operational challenges relating to its new distribution centre and an ongoing Competition and Markets Authority regulatory investigation into its vet business.
The CMA investigation has created “some uncertainty among investors, affecting the Company’s share price” and with shares trading at 15 times earnings, which is at the top end of the UK retail sector, the broker noted that this “valuation suggests that the market is pricing in flawless execution, an assumption we find increasingly difficult to justify given the recent operational issues in Q2”.
Pets at Home shares were trading at 282.80p, down 4% this year and up 0.07% over the last 12 months.
