B&Q owner Kingfisher PLC (LSE:KGF) gained 4% on Tuesday afternoon, aided by a share price target upgrade from Deutsche Bank.
Following the retailer’s annual results on Monday, Deutsche hiked Kingfisher’s share price target from 225p to 245p, which would see it climb 2.25% on Monday’s close.
“In our view, investor sentiment on the stock remains negative with short interest approaching around 10%,” Deutsche acknowledged.
However, “in combination with the management focus on free cash flow, many boxes are being ticked for an attractive value stock”, the bank added.
Kingfisher had unveiled cautious guidance for the year ahead, citing a lag between housing demand and home improvement demand.
This followed a 22.3% drop in statutory pre-tax profit to £475 million over last year.
“The biggest question remains one of catalyst timing in our view,” Deutsche continued, especially with regard to Kingfisher’s French business.
Kingfisher noted a plan was underway to simplify the French business though, aimed at growing profitability ahead.
“We appreciate the more detailed guidance given by management,” Deutsche added, setting its pre-tax profit forecast for the year ahead at £500 million.
Though the bank maintained a ‘hold’ rating on Kingfisher, analysts said “we can see a much more balanced risk and reward at this stage”.