SocGen upgrades Kingfisher after results

Societe Generale upgraded B&Q owner Kingfisher to ‘hold’ from ‘sell’ and lifted the price target to 359p from 333p following the company’s results on Wednesday.

The bank said some early signs of recovery in the French home improvement market, together with a weaker reporting currency (UK pound), make Kingfisher’s profit forecasts look better supported over the year ahead than they have been for a while.

“The UK trading outlook remains solid for the short term, although we will be on the alert for any post-April stamp duty change impact on the UK housing market as well as the ‘Brexit’ risk,” it said.

SocGen noted its earnings per share estimates have barely changed since November last year.

It said the weaker pound, above-the-line restructuring costs and a better-than-expected divisional profit outcome for the year to January 2016 have had a net neutral impact.

“As a collection of mostly mature operating companies in mainly ex-growth markets, Kingfisher has little choice but to seek product and operating synergies in order to enhance the margin.

“The aim of offering customers better-designed, more inspirational and lower priced product could be the single most beneficial outcome of the five-year ‘ONE Kingfisher’ plan, if it is achieved.”

However, SocGen said execution risks remain high and five years is a long time to wait for the full £500m P&L benefit.

At 0910 GMT, Kingfisher shares were down 0.2% to 370.55p.