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On Thursday, Citi analysts adjusted their outlook on Kingfisher Plc (LON:KGF:LN) (OTC: KGFHY), increasing the price target to GBP3.00 from the previous GBP2.49, while maintaining a Neutral rating on the stock. The revision anticipates a strong first-quarter performance for the fiscal year 2025/26, particularly from the company’s profitable UK business. According to InvestingPro data, the stock has already demonstrated strong momentum with a 34.37% return year-to-date, and analysis suggests the stock may be undervalued at current levels.
The analysts expect Kingfisher’s upcoming trading update, scheduled for May 28, to reflect a robust showing, driven by a resilient do-it-yourself (DIY) customer base and favorable weather conditions. With a healthy financial position indicated by InvestingPro’s GOOD overall health score and a substantial revenue base of $15.85 billion, the company appears well-positioned for growth. This seasonal uplift is anticipated to be more pronounced due to the easier comparatives for seasonal stock-keeping units (SKUs), which account for approximately 19-20% of sales, after two years of lackluster weather that resulted in flat and negative like-for-like (LFL) seasonal sales in the first quarters of the previous two fiscal years.
Year-to-date strong DIY trends and insights from Wickes’ recent trading update, which reported a retail LFL increase of 9.2% for the 17 weeks leading up to April 26, have bolstered these expectations. Although the seasonal strength may not persist, it has contributed to a less pessimistic view of the UK DIY consumer market. The company’s attractive 4.94% dividend yield and strong cash flow generation support its investment case. Analysts believe that the current stock price likely reflects an adjusted profit before tax (PBT) for the fiscal year 2025/26 at the higher end of the guidance range, which is between £480 million and £540 million.
In addition to the UK business performance, Citi analysts highlighted that the forthcoming comments on the outlook for Kingfisher’s operations in France and Poland, as well as updates on the company’s strategic progress, will be of significant interest to investors and could play a crucial role in shaping the stock’s future trajectory. For deeper insights into Kingfisher’s valuation and growth potential, investors can access additional exclusive analysis and financial metrics through InvestingPro.
In other recent news, Barclays (LON:BARC) has downgraded Kingfisher Plc’s stock rating from Equalweight to Underweight while slightly increasing the price target from GBP2.75 to GBP2.80. This change comes as Kingfisher prepares to release its first-quarter sales report for the fiscal year 2025/26. The company is expected to report group like-for-like sales at -0.4%, though this figure improves to +0.4% when adjusted for calendar impacts. This marks the first underlying like-for-like sales improvement for Kingfisher in some time. Despite the anticipated sales increase, Barclays does not expect Kingfisher to change its profit before tax guidance, which remains between £480 million and £540 million, or its free cash flow forecast, set between £420 million and £480 million. The downgrade is attributed to modest estimate changes influenced by foreign exchange factors, which also led to the slight increase in the price target. Barclays’ outlook suggests that the expected sales improvement may not justify a more favorable stock rating at this time. Investors will be closely monitoring Kingfisher’s upcoming sales report to assess the company’s performance and its alignment with these forecasts.
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