Broker snap: Panmure Gordon highlights buying opportunity at Dunelm

12th Feb 2013 10:14

Panmure Gordon remains a 'buyer' of homewares retailer Dunelm with a 886p target price after the met profit forecasts in the first half."With the shares -2.6% yesterday, though +13.5% year-to-date, any further consolidation today is a buying opportunity in our view," the broker said on Tuesday morning.Interim profit before tax (PBT) rose 14.6% year-on-year to £59.8m, "bang in line with expectations", the broker said. "Very strong gross margin guidance on top (better than +30 basis points improvement) meant that we raised our £107.3m full-year (FY) 2013E PBT estimate to £108.3m."Meanwhile, total sales of £340.1m came in slightly ahead of the £335.9m due to a better-than-expected second quarter owing to new space contributions.The broker said that the yield from new space "continued to beat out estimates so that we are confident that our FY2013E revenue target of £667.7m (+10.6%) is attainable".Panmure said that the stock's price-to-earnings/growth ratio ("only 1.5x") is low relative to its retail peers.Despite the positive comments, shares were down 1.07% at 783p by 10:14 on Tuesday.BC