JP Morgan has placed B&M European Value Retail on negative catalyst watch ahead of the discount retailer's first-half results on 12 November.
It warned that the shares' strong recent run has left the investment case looking lopsided.
The US investment bank, which has an underweight rating on B&M, said it broadly agreed with management's Back to B&M Basics turnaround strategy but believed the market was underestimating the cost and volatility involved in delivering it sustainably.
B&M's shares have risen around 70% this year and 40% in the past three months alone, leaving the stock trading at a premium to the wider retail sector despite the absence of a consistent return to positive like-for-like sales growth in the UK and no clear visibility on the margin outlook.
JP Morgan also noted that short interest in the stock had halved in recent months, suggesting investors have shifted to a more optimistic stance just as the fundamental picture remains uncertain.
The broker said its own earnings estimates sat in the high single digits to double digits below market consensus, and that heading into the half-year update the risk-reward looked asymmetric, with limited room for positive surprise but meaningful downside if trading disappointed.
