Broker tips: Kingfisher, Cairn Energy, Retailers

1st Dec 2011 12:49

While B&Q and Screwfix owner Kingfisher reported third quarter profits ahead of Investec's forecasts, the broker has reiterated its hold rating given the "undemanding valuation metrics"."We have...cut our outer year forecasts in anticipation of negative LFLs [like-for-likes] in France next year, albeit mitigated by continuing direct sourcing benefits," the broker said.As such, the target price is cut from 245p to 235p.Following Cairn Energy's "disappointing end to the Greenland programme", UBS has nudged its target price lower.The oil giant said yesterday that it had failed to find a commercial discovery at its exploration drilling campaign offshore Greenland, where drilling operations were extended to complete activities on the last two wells in the Atammik block. After removing the risked value associated with the Atammik wells, UBS has cut its target price from 360p to 355p.Nevertheless, the broker has kept its buy rating on the stock, saying that it still looks cheap on the Cairn India deal valuation.Investec has reiterated its underweight stance on the UK retail sector due to the cautious attitudes of cash-strapped consumers and ahead of an uncertain key trading period at Christmas "The combination of very weak consumer confidence and unseasonably warm weather has resulted in a plethora of negative LFL sales trends from retailers, and some of the earliest Christmas profit warnings we can remember," said analysts David Jeary and Bethany Hocking.After making forecast reductions on almost half of its coverage universe, the broker downgrades Marks & Spencer, Debenhams and Game from buy to hold, and cuts its rating for KESA Electricals, Mothercare and Howden Joinery from hold to sell. The broker upgrades Next from hold to buy on the back of the group's strong cash generation and the strength of its Directory business. BC