Kingfisher share price under pressure as RBC trims rating on B&Q owner

Kingfisher share price under pressure as RBC trims rating on B&Q owner
Written by:
Tsveta van Son
October 21, 2019

Shares in Kingfisher (LON:KGF) closed at the bottom of the FTSE 100 index yesterday, as analysts RBC trimmed their rating on the B&Q owner. Proactive Investors quoted the broker as saying that it expects the earnings downgrade cycle to continue.

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Kingfisher’s share price shed 4.01 percent to close at 217.70p, underperforming the broader UK market, with the benchmark FTSE 100 index ending trading 0.03 percent higher at 6,970.59 points. The group’s shares have lost more than 35 percent of their value over the past year, as compared with a near 10-percent dip in the Footsie.

RBC trims rating on Kingfisher

RBC lowered its rating on Kingfisher to ‘underperform’ yesterday, trimming its price target on the shares from 240p to 200p. The move came as the analysts slashed their pre-tax profit and earnings per share forecasts for the DIY retailer by around four-six percent for full-year 2019/20 due to lower like-for-like sales assumptions.

Proactive Investors quoted the broker as saying in a note to clients that the Kingfisher’s major brand Castorama was underperforming the French DIY sector as it had a weak digital offering, and its new unified offering had not resonated with customers. RBC further noted that Castorama’s like-for-like sales growth in Poland had recently faded as well.

The analysts also highlighted the impact of a challenging outlook for French and UK housing markets, saying that, as a result, it would take time for customers to respond to Kingfisher’s marketing initiatives.

Other analysts on DIY retailer

HSBC lowered its rating on Kingfisher to a ‘hold’ earlier this month, without specifying a price target on the shares. According to MarketBeat, the blue-chip retailer currently has a consensus ‘hold’ rating and an average price target of 295.63p.

As of 08:03 GMT, Tuesday, 22 January, Kingfisher plc share price is 217.70p.