LONDON (ShareCast) - (Sharecast News) - Barclays downgraded its stance on B&Q and Castorama owner Kingfisher on Tuesday to 'underweight' from 'equalweight' as it said the more than 25% year-to-date total shareholder return was "overly generous".
The bank noted that Kingfisher is due to report first-quarter sales on 28 May and said its forecast is for a group like-for-like sales decline of 0.4%, equivalent to a modest 0.4% increase excluding calendar impact.

"This would be the first quarter in quite some time for Kingfisher to register underlying LFL improvement," it said. "Having said this, we doubt that Kingfisher will look to change its FY25/26 guidance for PBT (£480-540m) or free cash flow (£420-480m) at this relatively early stage in the year."

Barclays said that despite expecting an improved top line performance from Kingfisher, it is downgrading the stock as it feels the better sales growth that it expects from B&Q in Q1 is likely to be largely weather-driven and not something that it would want to extrapolate forwards.

In addition, Barclays said it still expects the French business to be in a clear LFL sales decline in Q1 and that the market data offers little obvious room for encouragement on the local industry dynamics.

The bank also said it does not expect Screwfix to have benefited greatly from the weather in the first quarter, given its specialist customer base. It said that having got close to its target of more than 1,000 stores in the UK/Ireland (now at 952), it is expecting Screwfix's sales trends to moderate.

"We now forecast sales growth of 12% in the last decade. It is too early to have confidence in the outlook for Screwfix France - in fact we have been underwhelmed by the pace of store openings," it said.

Looking at its General Retail coverage, Barclays said it sees better value opportunities at B&M European Value Retail, which is rated 'overweight' with a 400p price target and Marks & Spencer, which is also 'overweight', but with a 430p price target.

Barclays said it sees Next and Inditex - both of which are 'equalweight' - as offering more reliable growth opportunities.

The bank lifted its price target on Kingfisher to 280p from 275p due to small, FX-driven estimate changes.

Berenberg initiated coverage of Accesso Technology with a 'buy' rating and 775p price target.

"We think that it is well positioned in a large, growing and fragmented market," the bank said.

"Significant operational leverage and a software as a service- (SaaS)-based business model provide scope for upside to accesso's current - relatively low - margin levels. Meanwhile, strong cash-flow generation and surplus cash should provide further upside potential."

It said the company, which provides virtual queuing and ticketing solutions for the global leisure industry, does have underlying exposure to cyclical elements of the leisure industry, which has weighed on its relative rating.

However, Berenberg believes that concerns about US consumer confidence are overdone, and that the market underappreciates Accesso's recent diversification and its long-term growth potential.

It said the recent share price performance has diverged from the underlying performance of the business and the stock now trades at a discount to peers and to its more recent historical average.

"We see this as an attractive entry point into a long-term growth story."

RBC Capital Markets upped both forecasts and its price target for blue chip generics specialist Hikma Pharmaceuticals.

The broker said Hikma had recently provided mid-term guidance that "reflects growing optimism about the Rx and injectables businesses".

It continued: "This adds to the positive outlook for the branded unit, communicated in late 2024. Overall, Hikma anticipates three-year revenue growth of 6% to 8% per annual, and core operating profit growth of 7% to 9% per annum."

RBC has therefore increased its 2027 forecasts for earnings before interest and tax by 9%, and the price target by 3%, to 2,635p.

It concluded: "With 27% upside, we reiterate our 'outperform' recommendation."

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