Broker tips: Unite, Drax, Dunelm, Barratt Redrow, Schroders

12th Feb 2026 14:21

(Sharecast News) - JPMorgan reinstated coverage of Unite Group on Thursday at 'overweight' with a 725p price target as it said the stock's recent de-rating was excessive given structural drivers.

"We recognise that the jury is still out on whether we have reached a turning point for UK student accommodation; there is general unease around the outlook and Unite's guidance for an EPS decline in FY26 has seen the shares de-rate," the bank said.

However, at 13.6x trough earnings, with a 6.5% dividend yield, JPM thinks it is overdone.

"We expect a bumpy ride higher as investors scour data on applications, nomination activity and the behavior of returners, but re-engaging with the stock after a period of restriction and aware of its underperformance (1year: circa 40%) we expected to find a more challenging backdrop to the one we ultimately found."

Citi downgraded Drax on Thursday to 'neutral' from 'buy' as it said the shares were already discounting much of the probability-weighted upside, but lifted its price target on the stock to 923p from 850p.

The bank noted that Drax has been a standout performer in an arguably fully-valued sector, with the shares up about 25% over the past three months.

"Our previous upgrade was underpinned by the optionality value around potential AI/DC development embedded in Drax's 'old-world' assets, which we captured through a probability-weighted approach," it said. "We now see the shares fairly pricing in that optionality and see a growing expectation of delivery from Drax to support current valuation."

In the meantime, Citi said Drax has shifted focus towards FlexGen, which the bank thinks can benefit from structural changes in the UK energy system.

"Pellets remain more uncertain long-term, however strong medium-term offtake visibility should alleviate investor concerns in that division for now," Citi said.

Canaccord Genuity has reiterated its 'buy' rating for Dunelm following the homeware retailer's interim results this week, highlighting the company's long-term potential and strategic direction led by its new chief executive.

Dunelm's first-half results on Tuesday, which showed a 3.6% increase in revenues and a 6.8% fall in adjusted EBIT, were largely in line with guidance given in January's trading update, though the surprise addition of a 25p-per-share special dividend was likely to have pleased investors.

Meanwhile, comments on early third-quarter trading are "encouraging" after relative softness in the second quarter, leaving full-year expectations unchanged, Canaccord Genuity said in a research note.

Chief executive Clo Moriarty, who joined in October, outlined plans to leverage Dunelm's strong brand, loyal customer base and multi-channel reach, which should "deepen engagement, enhance merchandising, and build a stronger platform for future growth", the broker added.

The stock, trading at 12.1 times FY26 earnings and 11.6 times FY27 earnings, was kept at a 'buy' with a price target of 1,280p.

Analysts at RBC Capital Markets lowered their target price on property developer Barratt Redrow from 450p to 425p on Thursday as it updated its estimates to account for the firm's interim results.

RBC Capital said Barratt's mid-year change of accounting policy "raised a few eyebrows", but stated recent talk in the press about a return of 'Help to Buy' seemed "more interesting to investors" than whether or not imputed interest on building safety provisions were accounted for, especially as Barratt commented that "the key to a sustained recovery in the housing market and volume increases across the sector" was government support for prospective homebuyers.

The Canadian bank that said without government support, Barratt faces the challenges of working through sites more slowly and with lower margins than it would like, knowing that "self-help can only take it so far".

"We have updated our estimates to reflect Barratt's H126 numbers, and to predominantly account for i) higher build cost inflation, reducing gross margins, ii) the imputed interest accounting change, and iii) higher interest costs," said RBC, which has a 'sector perform' rating on the stock.

"Our PBT FY26 estimate is 2.1% lower than our prior estimate onan adjusted basis (pre PPA), though 7.2% lower on a reported basis. Our price target is c.5.5% lower, from 450p to 425p, driven by our reduced TBV estimates."

Panmure Liberum said on Thursday that US investment manager Nuveen's 612p per share takeover offer for Schroders was "too cheap" and "only a touch ahead of where we might have been pitching a new target price in an independent world".

Schroders shares surged nearly 30% on Thursday after it agreed to be taken over by Nuveen in £9.9bn deal. Under the terms of the acquisition, Nuveen, part of the Teachers Insurance and Annuity Association of America, will pay 612p per share. The price comprises a cash consideration of 590p a share and permitted dividends of up to 22p per share, with the cash consideration representing a 29% premium to the stock's closing price on Wednesday.

Responding to the news, Panmure said it had a note ready to outline how well the company had done, how quickly management had delivered change, how much more upside there was to come as the market started to fully appreciate all that had happened in just 15 months.

"Instead Nuveen will take the spoils, offering 612p per share, only a touch ahead of where we might have been pitching a new target price in an independent world," it said. "With the offer being recommended the Family has clearly decided to move on, but the rest of us will be poorer for it."

Panmure continued: "We fear that the offer came too soon in the process of change, and another year of the kind of change seen already in 15 months might have put the share price in a different starting place."

Panmure Liberum has a 'buy' rating and 475p price target on the stock.