Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors

Kingfisher lifted by rating upgrade from HSBC, but other retailers downgraded

The bank has raised its stance for the B&Q chain owner to ‘buy’ from 'hold’ with an increased price target of 440p, up from 380p previously
B&Q store
HSBC said Kingfisher is now “a preferred play amongst UK large cap non-food retailers”

DIY retailer Kingfisher PLC (LON:KGF) was a top blue chip gainer in mid-morning trading, taking on 1.7% at 364.3p buoyed by an upgrade in rating from HSBC.

The bank has raised its stance for the B&Q chain owner to ‘buy’ from 'hold’ with an increased price target of 440p, up from 380p previously.

READ: Kingfisher turnaround plan on track; but warns on France outlook

In a note to clients, HSBC’s analysts said: “The Kingfisher transformation plan is radical, ambitious and has a lower risk than headline performance targets suggest.”

They added: “We believe that the execution risk attached to key elements of the plan, particularly the unified product and offer, is not as high as the headline performance targets suggest (a year 2 unified product target of 20%).”

The analysts pointed out that “against a backdrop of relatively supportive DIY markets, we forecast a three-year EPS CAGR (compound average growth rate) of 11%” for the group.

They said Kingfisher is now “a preferred play amongst UK large cap non-food retailers”.

Cautious elsewhere in the non-food retail sector

However HSBC was less positive on other non-food retailers in a separate sector review published on Wednesday, downgrading a trio of players – Halfords PLC (LON:HFDS), Dunelm Group PLC (LON:DNLM), and N Brown Group PLC (LON:BWNG) - all to ‘hold’ from ‘buy’.

All three featured among the biggest FTSE 250 fallers, with homewares stores firm Dunelm down 4.2% to 590p, bikes to car parts chain Halfords losing 2% at 352.9p, and plus-sized clothing retailer N Brown off 2% as well at 258.75p.

The bank’s analysts said: “The sector’s risk profile is increasing as the UK discretionary consumer outlook deteriorates.”



Register here to be notified of future KGF Company articles
View full KGF profile View Profile

Kingfisher Timeline

Related Articles

H&T pawnbrokers
March 13 2017
H&T had an aureus anni - that's a golden year to thee and me (if Google translate is to be trusted)

© Proactive Investors 2017

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use