LONDON (ShareCast) - (ShareCast News) - Kingfisher's attempt to implement joint-buying across the group will fail again (for a third time in fact) but at their current price the shares were implicitly assigning almost zero value to almost all its units, leading Morgan Stanley to double-upgrade the stock from 'underweight' to 'overweight'.
The bank also bumped up its target price from 290.0p to 380.0p.

As an example, analysts Geoff Ruddell and Amy Curry posited a scenario where the company's Screwfix business was valued at 15 times earnings.

That, they went on to say, would mean its other key operating companies were "almost worthless" using a sum-of-the parts valuation.

Simply for the whole group to be worth less than 400.0p a share the rest of those operating companies would need to be valued at single-digit price-to-earnings multiples.

Yet the company had £3.4bn of freehold property on its books, £0.6bn in cash and its pensions scheme was sporting a surplus.

So eventually, they went on to say, investors would stop focusing on the negative news-flow and forecasts for the company and begin to ponder what the proverbial 'Plan B' was, despite management's assertion that it did not have one.

Ironically, one of the biggest risks was the possibility that the firm's so-called 'One Kingfisher' plan might prove partially successful.

"Also, if 'One Kingfisher' proves only partially successful, neither driving a shift in focus to asset backing, nor the increase in profitability that management is aiming for, the shares could yet drift down further."

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