Deutsche Bank upgraded Kingfisher PLC (LSE:KGF) from a ‘hold’ to a ‘buy’ but reduced its target price.
Previous guidance was set at 355p, but that has been clawed back to 335p, with shares currently trading at 259.3p.
Home improvements markets have steadied after a surge in business during Covid, but the company is “well placed to take advantage” of some attractive longer-term drivers.
Trade, which accounts for roughly 50% of the business is expected to see strong growth in comparison to DIY sales over the next year.
Shares have tumbled 25% so far this year, with the broker pinning this on investor uncertainty over consumer spending and a fear of a slowdown in housing transactions.
Profit before tax is forecasted to retreat slightly in 2023 before bouncing back in 2024.
Kingfisher rates a ‘buy’ on the basis of the “cheap valuation, better earnings resilience than many expect and ongoing investments being made into the business for the longer term.”