Deutsche Bank slightly lowers target price on Kingfisher

Analysts at Deutsche Bank slightly lowered their target price on home improvement retailer Kingfisher from 280.0p to 275.0p on Friday, stating the stock was "swimming against the tide".

Deutsche Bank said sales trends had held up better than expected for Kingfisher, both in the UK and France - especially given the reversal of Covid trends.

However, DB also said the pressure on disposable income from inflation and the slowdown in housing transactions was still likely to weigh on the sales outlook for the fourth quarter of 2022 and into 2024.

"The consensus view is that Kingfisher profitability will not be able to stand up against this tide but we believe that the current valuation already reflects the risk of a sales slowdown and management is focussing on cost control whilst investing for future growth," said DB.

The German bank also noted that the 2024 trading year will not be "a strong year" for UK retailers, but said its view was that home improvement will prove to be "more resilient" than investors expect.

"Kingfisher has the benefit of geographic diversity and a strong balance sheet," added DB, which reiterated its 'buy' rating on the stock.

Reporting by Iain Gilbert at Sharecast.com