DAVY VIEW

The challenges facing Kingfisher are, if anything, becoming more intense. With evidence of increasing headwinds in France, we are cutting forecasts for the recently ended (January 2019) and current (January 2020) financial years. The latter adjustment (-7% to underlying pre-tax profits) leaves our forecasts well below the latest consensus estimate. Hence we believe the downward trend of earnings revisions will continue. The stock as such screens cheap, but we think an operational inflection point or some form of strategic catalyst is needed before a re-rating can begin.