Berenberg initiates coverage on 'home and living' retailers
Analysts at Berenberg initiated coverage on a number of UK-based retailers on Monday following two "boom years" for the "home and living" sector as a result of the Covid-19 pandemic.
Berenberg highlighted that home and living activity levels had recovered sharply since the first lockdown in March 2020, driven by increased time spent at home, a change in how homeowners think about their homes, and limited options for spending discretionary income elsewhere, as access to travel and leisure had been limited.
The German bank first turned to Dunelm, which it branded "the omnichannel winner", initiating coverage on the stock with a 'buy' rating and a 1,310.0p target price and noting it expects the firm to continue its market share consolidation, outperforming the market – with its "well-invested omnichannel proposition" providing a competitive advantage over its digital peers.
"Dunelm offers one of the strongest ROIC profiles in European retail and its cash-generative business should support additional capital returns. We believe that the recent downturn in the share price has provided an attractive entry point into a structural winner," said the analysts.
Berenberg also picked up coverage on "digital disruptor" Victorian Plumbing Group with a 'buy' rating and a 260.0p price target and "DIFM specialist" Wickes Group with a 'buy' rating and 280.0p target price.
Online home furnishing brand Made.com and DIY retailer Kingfisher were started at 'hold', with price targets of 165.0p and 370.0p, respectively.