Kingfisher Cut at Barclays Ahead of ‘Potentially Underwhelming’ H1 Results

Shares of British home improvement retailer Kingfisher (LON: KGF) fell around 1% in Monday's session following a downgrade by Barclays, which shifted its rating from Overweight to Equal Weight in a note to clients.

The move comes ahead of Kingfisher's first-half results, expected on September 17, which Barclays analysts described as “potentially underwhelming.”

Barclays maintained its price target for Kingfisher at 300p but noted that the stock's valuation now appears more reasonable in light of expected market conditions.

The brokerage cited a combination of factors influencing the downgrade, including an overall market re-rating and a cautious view of Kingfisher's near-term earnings. Despite this, Barclays remains optimistic about the company's medium-term strategy, particularly its efforts to revitalise its French business.

The downgrade made Kingfisher one of the top losers in London's blue-chip FTSE index on Monday, reflecting investor concerns about the retailer's short-term performance.

Barclays analysts also anticipate a decline in like-for-like sales for Kingfisher's second quarter, contributing to the negative outlook for the upcoming results, while they see a profit before tax decline of around 17%.

Even so, Barclays is more optimistic “if macro-economic factors move in Kingfisher's favour and the company executes well.” They state that in this instance, “there could be a very positive scenario in which the UK business remains robust and recovery in France and Poland drives significant profit growth over the medium-term.”

Kingfisher shares are down around 0.21% in early Tuesday trading.