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.
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.”