JD Sports Fashion PLC (LON:JD.) has been downgraded to ‘underperform’ from ‘sector perform’ and Kingfisher PLC (LON:KGF) was upgraded to ‘outperform’ from ‘underperform’ by RBC Capital Markets.
Analysts made the changes to reflect two sides of the retail sector post-pandemic, when consumer behaviour is expected to change.
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JD Sports’ longer-term margin recovery prospects may be compromised by a shift to online shopping, while its usually young customer base may decrease in spending confidence amid a tough job market.
The Canadian bank raised the target price to 625p from 570p as the stock was “clearly oversold during the COVID crisis, falling around two thirds from highs reached earlier this year,” although shares recovered by 30% last month.
Meanwhile, Kingfisher is well placed to benefit from sustained consumer interest in the home improvement market, according to analysts, thanks to a renewed interest in DIY to save money during a recession.
The target price was bumped up to 230p from 165p as RBC assumes “slightly more operating leverage longer term” plus lower capital intensity as the company focuses more on online.
Shares in JD Sports dropped 3% to 674p while Kingfisher rose 3% to 213.8p on Monday morning.