Kingfisher cut to 'sell' as Investec sees no sign of near-term pick-up

Kingfisher has been lowered from 'hold' to 'sell' by Investec, with the South African bank saying it sees no sign of a recovery at the DIY retailer any time soon.

The B&Q and Wickes owner has "always been a business full of opportunities and challenges", Investec said.

"Describing ‘ONE’ Kingfisher as a 10-year strategy shows the scale of the task Ms Laury [CEO] faces in turning a collection of locally managed businesses into a single unified company," said veteran retail analyst Kate Calvert.

"With the completion of a four-year core IT system upgrade programme (currently at the start of year two) seen as key to unlocking future synergies, to us, Kingfisher remains a play on the European consumer. We see no sign of a pick-up in the near future."

The broker said that further currency pressures are expected this year, while it doesn't foresee a near-term improvement in the European consumer backdrop.

The recent re-rating of the stock to a price-to-earnings multiple of 15.5 on 2016 estimates - the sector trades at just 14.7 times earnings - means that Kingfisher is trading at a "demanding" valuation above its 10-year average.

Investec kept a 300p target price for the stock, which was down 0.2% at 350.9p by 11:22.