Kingfisher gets RBC upgrade as 'reasons to be cheerful' in France

DIY retailer Kingfisher has more "reasons to be cheerful" thanks to an improving French outlook, analysts at RBC Capital Markets said on Friday, while clothes seller Supergroup remains "compelling" but its shares have gained a lot in recent weeks.

RBC upgraded Kingfisher to 'sector perform' from underperform and moved its price target to 325p from 300p, while downgrading Supergroup to 'sector perform' from 'outperform' but moving its PT to 1,900p from 1,800p.

Kingfisher is now thought to be "better positioned versus the sector" given the broadening housing recovery in France, management's accelerated plans to improve French ecommerce and the group's strong performing Screwfix and Poland businesses.

"We still see risks to big ticket spend in the UK and execution risk with its unified offer strategy, but further cost savings should support the P&L and valuation is now less demanding."

Supergroup, meanwhile, has seen its shares gain 25% since its capital markets day, which highlighted "attractive medium term opportunities, a competent looking organisational setup and credible management team".

"These factors have not changed, but from an equity perspective the risk/reward profile now appears more balanced, with the earnings outlook stable and a more elevated P/E offering less support in our view."

The owner of the SuperDry clothing brand still offers a "compelling" medium-term opportunity, with as one of the fastest growing brands in the sector, although these growth rates are "normalising".

Analysts also eye "potential demand disruption" from an inventory rebase in the next two years, even though it this appears to be well managed and communicated by the company.