Broker tips: Dunelm, GSK, Greggs

9th Feb 2026 14:37

(Sharecast News) - Jefferies upgraded Dunelm on Monday to 'buy' from 'hold' as it said the recent de-rating was overdone.

The broker, which kept its price target on the shares at 1,075p, said it has long regarded Dunelm as a high‑quality retailer, though valuation and slower share gains have limited its enthusiasm.

"While we still expect medium-term profit before tax growth of circa 5%, the recent de-rating is overdone, in our view," it said, as it noted that shares had fallen around 20% on the back of weaker second-quarter trading.

"Of the retailers in the last month, the reaction to Dunelm's stood out to us," it said. "On the back of a softer Q2 performance, which saw growth slow to +1.6% (Q1 +6.2%), FY26 PBT expectations were guided circa 4% lower. And yet the shares fell by circa 20%."

Jefferies pointed out that trading was affected by heightened competitive activity and softer furniture sales, partly driven by now-resolved availability issues.

"In any case, we view it as a marked over-reaction, particularly given the unusual quarterly trading pattern - we would not be surprised if there had been some pull‑forward from the Q2 miss into the Q1 beat; certainly the H1 revenue growth number looked robust enough at +3.6%."

Currently trading on 11x FY27 estimated price-to-earnings, roughly 30% below the long-term average, Jefferies said it sees "an attractive entry point to buy".

Analysts at JP Morgan raised their target price on drugmaker GSK to £22.50 on Monday on improving investor perception.

JP Morgan said after GSK's full-year earnings per share came in 2% ahead of consensus and its in-line FY26 constant currency guide, it had opted to trim 26/27E EPS by 1-2%.

The broker noted that GSK has rallied strongly off a low-PE post-results, and said it thinks this was due to continued operational delivery, as well as new chief executive Luke Miels' focus on accelerating R&D, low-risk BD and underwriting GSK's £40bn 31E revenue target and flat margins through dolutegravir LOE 28-31E.

"While we think more pipeline is needed to achieve the sales and margin targets we see momentum in R&D (7 PIII starts 25E, GSK flagging potential new pivotal trial starts 26/27E for its B7-H3 & B7-H4 ADCs, GSK'981 (KITi) for GIST, Cabenuva Q4M, LA TSLP and regimen selection for Q6M HIV to be announced at a June investor event)" said JPM.

"We see the stock as likely to hold these perception-shift gains but prefer not to chase hence raise our TP to £22.50 and maintain 'neutral'."

Greggs shares slid on Monday after Jefferies downgraded the stock to 'hold' from 'buy' and slashed its price target on the stock to 1,610p from 2,500p as it said weight-loss jabs could dent demand for the bakery chain's products.

Jefferies noted that Greggs has faced a prolonged slowdown, with like-for-like sales weakening steadily since mid‑2024 and volumes turning consistently negative.

"While management referenced softer consumer spending and unfavourable weather, these explanations do not, in our view, account for the persistence or depth of the trend," it said. "Q4 offered some stabilisation but fell short of expectations, with negative volumes continuing, a slowing two‑year stack, and FY26 guidance cut circa 10% below consensus."

However, Jefferies argued that Greggs could be facing a more structural issue, noting that while investor concerns have typically focused on pricing and cannibalisation, it was now increasingly of the view that the rapid uptake of GLP‑1 weight‑loss drugs was impacting Greggs.

Jefferies noted that GLP-1 user numbers have risen sharply, now touching an estimated 7% of UK adults, with consumption patterns changing meaningfully.

"And the categories most affected are savoury, salty, fatty, and high‑calorie foods," it pointed out. "While the typical GLP‑1 demographic may only partially overlap with Greggs' customer base, those affected are likely to be higher‑BMI, higher‑frequency consumers - precisely the customers most valuable to Greggs."

Reflecting these dynamics, Jefferies lowered its medium‑term assumptions and now models LFL growth of 2.5%, down from 4.5%, the main swing factor being a continuation of negative volumes resulting from the enduring impact of weight-loss drugs.