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Citi upgrades B&Q owner Kingfisher to 'neutral'

By Michele Maatouk

Date: Thursday 15 Apr 2021

Citi upgrades B&Q owner Kingfisher to 'neutral'

(Sharecast News) - Citi upgraded its stance on shares of B&Q owner Kingfisher on Thursday to 'neutral' from 'sell' as it argued that ongoing DIY strength amid extended lockdowns provides good support to current expectations.
The bank said Kingfisher's management team has addressed several shortcomings to support performance in line with the market and the current DIY strength puts it in a sweet spot with limited need for promotional spend and disciplined competition.

Citi said there is limited downside risk to estimates for FY22 and a strong balance sheet more likely supports higher dividends or share buybacks once concerns around Covid restrictions ease. The bank estimates net cash at the end of FY22 at around £1bn pre IFRS 16 and net debt to EBITDA including IFRS 16 of 1x, "implying good scope for share buybacks and higher dividend payouts".

"Medium term we believe stiff competitive pressures in France still remain a concern and the headwind of a market normalisation in FY23e is not fully priced in," it added.

The bank has a 350p price target on the shares.


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