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Credit Suisse downgrades Kingfisher on 'lack of catalysts'

By Oliver Haill

Date: Friday 22 Mar 2019

Credit Suisse downgrades Kingfisher on 'lack of catalysts'

(Sharecast News) - Kingfisher's turnaround plan is still "the right plan", believes Credit Suisse, but analysts reckon the stock "lacks a near-term catalyst" and faces downside risks from the wider economies of the UK and France.
The analysts, which downgraded their rating to 'neutral' from 'outperform', have four areas of concern, including a lack of clarity over the process of finding a new CEO and the fact that "restructuring is never done" for most mature incumbent retailers.

Another issues is that the drop-through of gains from sourcing "has been slow and even 20/21 gains could be modest given the likely degree of range change", while the analysts were also disappointed that opex savings and the share buyback were not extended past their respective £100m and £600m limits.

No 'magic bullet' is perceived to be possible from asset sales, either, given the increasing degree of integration from the ONE Kingfisher strategy, neither splitting up, nor selling the Screwfix chain, nor even the bulk of the £3.4bn of property is seen as "feasible, desirable or likely".

Credit Suisse's target price was trimmed to 240p from 255p.


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