Jeffries said it is expecting strong third-quarter results from Kingfisher PLC (LSE:KGF) as the American investment bank repeated a ‘buy’ rating for the DIY and builders’ retailer.
The ‘buy’ with a target price of 440p suggests some 34% upside to the current price of 327p.
Transactions in the UK equalled 1.18mln for the first nine months, considerably higher than the previous year at 1.02mln, Jefferies noted, that number is only slightly less than the 1.2mln annual average between 2014-2019.
There are concerns however that UK trading may weaken in the next 12 months despite a strong year so far, it noted.
Jefferies sees demand returning to pre-covid levels and expects inflation will be passed on to the consumer across the industry. Retail consumers, who make a large part of Kingfishers sales, are likely to be hit hardest, the bank added.
The broker said it is also acutely aware of the top-down risks associated with the current UK housing market, with the average house price having increased by £25,000 in the last year according to the Office of National Statistics.
The broker also said Kingfisher is looking to rebuild margins in France, along with ongoing market share gains and an expansion of the Screwfix brand into Europe.
Kingfisher is slated to release third-quarter results on 19 November.