Shares digital

Kingfisher (KGF) 129.7p

Shares in Europe’s largest DIY retailer ticked up recently, but analysts are divided on its fate. The recently gloomy outlook given by Home Retail (HOME) about the UK market is certainly bad news for Kingfisher, points out analyst Rob Mann at Collins Stewart. He believes that it will be very difficult to see positive like-for-like sales growth at Kingfisher’s UK operations this year, and this assumption is already prompting earning downgrades. Hopes that a management change will turn things around are misplaced, he says, as most likely an internal candidate with little room to make strategic changes will be appointed. Finally, the shares still trade at a premium to the sector despite earnings visibility being low. Therefore we go short on Kingfisher after the recent bounce back, looking for a move towards the year lows reached in December.

ACTION: SELL Kingfisher • Target 116.5p • Stop Loss 137.5p

TIME TARGET: 5 WEEKS