Citigroup gave a lift to Kingfisher PLC (LON:KGF) shares on Wednesday, upgrading its rating to ‘neutral’ from ‘sell’ for the DIY retailer after setting a new price target of 320p.
In mid-morning trading, the FTSE 100-listed stock was 0.6% firmer at 313.10p.
READ: Beast from the East and weak UK consumer demand hurts Kingfisher sales
In a note to clients, the US bank’s analysts said they believe the short term benefit from Homebase store closures - around a 7% potential pre-tax profit uplift - will help offset the uncertain structural demand outlook and support profitability until the longer term benefits from the ONE Kingfisher programme kick in.
They added: “Our UK Household cashflow points to a slightly better UK environment and our 1200 respondent UK consumer survey points to a slightly better year ahead for DIY than the previous 12 months, albeit it remains in slight negative territory (-1% v -3% last year).
“However, intentions to spend at B&Q are up for the next 12 months (+2%) which supports our more positive view.”
The Citigroup analysts continued: “On a deeper analysis the B&Q and Screwfix brands score well on pricing, quality, variety and convenience - the most important factors with regards DIY purchasing.”
They increased their pre-tax profit forecasts for full-year 2019 to 2021 by 2% to 5%, largely reflecting hikes in UK like-for-like sale estimates.