Morgan Stanley has cut its rating for Kingfisher PLC (LON:KGF) to 'equal-weight' from 'overweight' as it no longer sees the DIY retailer’s shares as "attractive" as the firm searches for a new CEO after Véronique Laury resigned last month.
The US investment bank also chopped back its target price for the FTSE 100-listed firm to 245p from 390p, with the stock currently trading at 235p.
READ: Kingfisher CEO Véronique Laury to leave as the B&Q owner posts slump in 2018 profit
In a note to clients, Morgan Stanley’s analysts noted the group's decision to search for a new CEO to continue with its current ‘One Kingfisher’ strategy, which they have been sceptical about ever since it was introduced four years ago.
They said Kingfisher’s deteriorating financial performance provides clear evidence that this strategy is not working.
The analysts pointed out that, in their view, trading is likely to remain very poor and that further earnings downgrades may be forthcoming.
Announcing Laury’s resignation on 20 March, Kingfisher also reported a 52% plunge in full-year pre-tax profit as like-for-like sales fell 1.6% with declines at B&Q in the UK and Castorama in France offsetting growth at Screwfix in the UK and Brico Depot in France and Poland.