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Investing.com - BofA Securities initiated coverage on Dunelm Group PLC (LON:DNLM) with a Neutral rating and a price target of GBP11.53, according to a research note published Friday.
The research firm describes Dunelm as a "high-quality business" with a 2025 return on invested capital of 42% and approximately 95% free cash conversion. BofA projects that about 40% of the company’s market capitalization will be returned to shareholders by 2030, including through special dividends.
BofA expects Dunelm to continue outperforming its end market by 3 percentage points annually and deliver a 5% earnings per share compound annual growth rate from 2026 to 2030, which aligns with current consensus estimates.
The firm notes that while Dunelm’s 13x 12-month forward price-to-earnings ratio "doesn’t look expensive," many other UK consumer stocks are "outright cheap" by comparison.
BofA Securities indicates it "lacks conviction on any upside surprise or sufficient valuation support" for Dunelm shares, leading to its Neutral stance on the home furnishings retailer.
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