Kingfisher PLC (LSE:KGF), the owner of B&Q, traded 1.5% lower on Monday after it was downgraded by analysts at the Royal Bank of Canada (TSX:RY).
Experts at the bank dropped the retailer from ‘outperform’ to ‘sector perform’, claiming its guidance for France and near-term earnings could be overconfident.
Additionally, they believe other UK retailers like B&M European Value Retail SA (LSE:BME) offer better potential upsides.
Kingfisher is the second most shorted London stock, according to ADVFN, with around a 6.5% net short position.
RBC analysts said: “ The French home improvement market, where Kingfisher has a number two position, has been soft in recent quarters, and we think it will take time for consumer concern over macro factors to ease.
Despite the downgrade, RBC noted how the retailer is continuing to improve its offering, while in the UK, strong trading is allowing it to deliver healthy free cashflow.
RBC targets a 235p target price for the stock, with shares trading at around 221p on Monday.