Kingfisher share price advances as BofA upgrades stock

on Jan 21, 2016

Kingfisher’s (LON:KGF) share price has advanced today as Bank of America Merrill Lynch (BofA) upgraded the home improvement retailer to ‘buy’ from ‘neutral’, with an unchanged 380p price target as it pointed to recent share price weakness.

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According to BofA, the capital markets day on 25 January could be a positive catalyst for Kingfisher’s stock. The bank expects the group, which trades as B&Q and Screwfix in Britain and Castorama and Brico Depot in France, to update the market on the potential for cost savings from its programme to unify “goods not for resale”. It also reckons the company will reveals returns of further cash to shareholders and the recovery prospects in France.

“We see 19% earnings upside from potential cost/sourcing benefits and share buybacks but this is not in our forecasts at present,” BofA said in a note to clients. In addition, the bank upped its earnings per share estimates for 2016-2018 thanks to the recent strengthening of the euro and the Polish zloty, which boosts its revenue and earnings forecasts. “Kingfisher should benefit from improved housing and real wage trends in the UK, and the closure of excess B&Q space should help improve sales densities and returns, albeit from a low base,” BofA concluded.
Kingfisher’s share price has outperformed the broader UK stock market today. By 13:28 GMT, the stock had gained 2.55 percent to 334.00p, while the FTSE 100 had increased by 1.08 percent to stand at 5,734.69 points.


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