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FTSE 100 Live: Stocks flat, Dunelm out of favour as RBC downgrades

Published 04/07/2023, 09:36
© Reuters.  FTSE 100 Live: Stocks flat, Dunelm out of favour as RBC downgrades

Proactive Investors -

  • FTSE 100 little changed, up 2 points
  • Dunelm (LON:DNLM) falls after RBC downgrade to underperform
  • Housebuilders fall on cautious JP Morgan comments

Dunelm out of fashion at RBC

Top of the FTSE 250 fallers is home furnishings outfit, Dunelm.

Shares tumbled 6.8% to 1,044p after RBC Capital Markets downgraded the stock to underperform from sector perform.

”With cost of living pressures persisting, unfavourable movements in the UK housing market and only a moderate store expansion story, we think that growth will be more difficult to come by now,” the broker said.

“As such, we see greater upside potential in travel (SSP, WH Smith (LON:SMWH), Dufry) and Discount (AB Foods (LON:ABF), B&M Value Retail) given strong topline momentum and meaningful expansion for these names.“

RBC still views Dunelm “as a well-managed business with a strong position in the UK homewares market.”

Alongside the rating downgrade, RBC has cut its price target to 1,000p from 1,300p.

FTSE 100, JP Morgan warms to Centrica and Drax

The FTSE 100 continues its muted start to proceedings, down 1 points.

But despite the subdued overall picture a number of stocks are on the move, up and down.

Heading upwards, shares in Centrica (LON:CNA) rose 0.8% and Drax climbed 1.7% after JP Morgan placed both stocks on positive Catalyst Watch ahead of interim results.

Informa rose 0.7% after analysts at Citi reiterated a buy rating with an increased price target of 850p, up from 720p.

But Dunelm remained top of the FTSE 250 fallers, down 5.2%, after the RBC downgrade.

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Sainsbury remains a weak feature despite a broadly well received trading update.

Sophie Lund-Yates at Hargreaves Lansdown (LON:HRGV) said: “Sainsbury’s has come out the gate swinging, insisting that its efforts to keep prices low have seen shoppers buying a higher number of items, with first-quarter sales rising over 9%.”

But she did caution: “The financial year is still in its infancy though, and the questions of demand and margins may have dimmed but they’re certainly still present.”

Restore plunges after warning, CEO leaves

Not a good morning for shareholders in Restore (LON:RSTP). Shares are now down 30%, extending earlier falls, after a profit warning and news its chief executive is standing down.

The firm is now forecasting 2023 pre-tax profit of around £31mln. Broker Peel Hunt notes this compares to its forecast of £41.0mln and consensus of £41.2mln.

"Ahead of management conversation, we will withdraw estimates, target price and our recommendation," the broker said.

The company said that the price of recycled shredded paper has significantly fallen in the past month with this trend anticipated to continue into the second half.

Charles Bligh is to stand down as chief executive with Jamie Hopkins assuming the position.

Read more on Proactive Investors UK

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