Dunelm Group PLC (LSE:DNLM) shares "appear oversold" ahead of the retailer's first-quarter update on Thursday 23 October, according to Deutsche Bank.
Investors seem to have steered clear due to cautious consumer commentary in September, said analyst Benjamin Yokyong-Zoega, yet subsequent industry data has shown strong demand for the homewares category.
The shares are down circa 10% since September's final results, with the sell-off "driven by a cautious tone on consumer demand against rising opex inflation and capex in the year ahead", the analyst said.
"Our proprietary survey data show no signs of slowing demand at Dunelm and industry data points show stronger spending across homeware and furniture over July to September."
Reiterating a 'buy' rating, he said Dunelm's attractions included a leading proposition, strong own brand, broad pricing architecture and multichannel model, along with around a 7% free-cashflow yield.
The shares, he noted, trade for 13 times calendar 2026 forecast earnings, versus an average circa 16 times pre-Covid, and Deutsche's 1,360p target price implies circa 20% potential upside.