Credit Suisse lifts Kingfisher target on DIY retail hopes

17th Mar 2014 09:43

Credit Suisse has lifted its target price for B&Q owner Kingfisher from 440p to 460p and reiterated its 'outperform' rating, raising hopes for demand amid an improving environment for DIY retail."Most of the indicators in recent months have pointed to strengthening in home-related expenditure," the bank said in a research report.It expects the weather to be an increasing benefit during the spring, particularly March and early April which suffered from record-low temperatures last year, exacerbated by an early Easter."We estimate that spring is at least a month earlier this year and with some good weather at weekends, the outdoor season should be starting very well. Looking at the UK housing market, prices and volumes are just getting into full swing."Ahead of Kingfisher's annual results on March 25th, Credit Suisse has raised its full-year like-for-like sales growth forecast for B&Q by 50 basis points to 3.5%, "with risk to the upside".Trading at 15.6 times forward earnings, the bank said Kingfisher remains "cheap" relative to the UK retail sector despite increasing evidence that the nine-year downturn in UK DIY is ending. Credit Suisse also believes that the company could be ready to make a capital return to shareholders and expects a £300m per annum share buy-back starting this year."At 3.5% of market cap it is not huge, but of symbolic importance," the bank said.BC