LONDON (ShareCast) - (ShareCast News) - B&Q and Castorama owner Kingfisher got a boost on Monday as Goldman Sachs upgraded its stance on the stock to 'buy' from 'neutral' and lifted the 12-month price target to 375p from 330p, saying the market is too sceptical on the 'One Kingfisher' efficiency strategy.
It said that while management's plan may appear ambitious, its analysis suggests that Kingfisher should be able to deliver £300m of cost savings by FY21, versus Reuters consensus of around £250m and company guidance of £500m.

The bank said it expects earnings per share growth of around 13% per annum over the next three years and return on capital employed to increase to 12% from 10% by FY21. In addition, it said that strong macro indicators in France, along with a revamped online offer, should be tailwinds in FY19. GS noted that Kingfisher now has a new B&Q app and plans to relaunch its website/app in France, adding that online could contribute 100 basis points per annum to like-for-like sales.

"We believe the market is overly cautious and that, even on bear case assumptions, the stock is at a significant discount to its long-term average."

Kingfisher's efficiency programme aims to add £500m a year to profit within five years and return £600m to shareholders within three years.

At 1245 BST, the shares were up 2.1% to 316.90p.

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