Goldman Sachs gave a boost to Kingfisher PLC (LON:KGF) today after the US bank upgraded its rating for the DIY stores group to ‘buy from ‘neutral’.
The bank also raised its target price for the FTSE 100-listed stock to 375p from 300p, which implies around 18% upside to Friday’s closing price.
READ: Kingfisher jumps as first-half profit beat forecasts, but cautious on second-half backdrop in UK and France
In early morning trading, Kingfisher was a top blue chip gainer, up 2.2%, or 6.7p to 317.0p.
In a note to clients, Goldman analysts said they think the market is too cautious on the group’s 'One Kingfisher’ efficiency programme.
They estimate that the B&Q, Screwfix and Darty stores operator should be able to deliver £300mln of costs saving by 2021, against consensus estimates £250mln, though company guidance is for £500mln.
READ: Morgan Stanley double upgrades B&Q owner Kingfisher even though it expects turnaround plan to fail
The analysts expects the firm to report earnings per share growth of around 13% per annum for the next three years and see its return on capital employed (ROCE) increasing to 12% from 10% by full year 2021.