Broker snap: Deutsche Bank cuts Kingfisher forecasts

Deutsche Bank has trimmed its fourth-quarter forecasts for B&Q and Screwfix owner Kingfisher on the back of a negative read-across from peers in the DIY retail industry."Last week's data from Homebase and the Banque de France suggest market weakness and continued downside risk to Kingfisher's Q4 profits," the broker said on Wednesday morning.Despite consensus forecasts having already been reduced by 16% during 2012 - owing to "currency, the weather and some execution errors" - evidence of weakness in the UK and French DIY markets has led Deutsche Bank to cut its fourth-quarter retail profit estimate from £134m to just £109m. As such, the full-year profit before tax (PBT) forecast is reduced by 3.6% from £726m to £700m. With next year's full-year PBT estimate having also been cut by 5.0% to £770m, the broker's target price for the stock is trimmed from 300p to 290p, a cut of 3.3%.Deutsche Bank has retained its 'hold' rating for Kingfisher on the back of "continued macro risks". The broker noted that the stock trades at 11.8 times current-year earnings, a small discount to the wider UK general retail sector (trading at 12.2 times earnings)."Upside risks include a stronger margin recovery from self-help initiatives and a return of surplus cash to shareholders, although we think this unlikely in 2013. "Downside risks include a decline in the French DIY market, due to austerity measures, no pick up in UK house moves, and currency translation."Shares were down 0.59% at 271.4p by 09:18 on Wednesday.BC