Kingfisher's update on store portfolio will likely disappoint, says Citi

Kingfisher's shares flapped lower on Friday despite analysts at Citigroup raising their price target, as the US bank said the DIY retailer's upcoming strategy update is "likely to disappoint".The broker upped its target for the stock from 310p to 370p after rolling forward its valuation methodology, but kept a 'neutral' recommendation."While some investors may be hoping for the new chief executive to announce a broad space closure programme for B&Q at the results on 31 March, management comments at the first-half results and Kingfisher's cautious approach to date leave us unconvinced that this is imminent," Citi said in a note."Given downside earnings risk, we retain our 'neutral' rating on the stock."While exiting store leases over the next three years would be accretive to earnings, management are unlikely to take this action over that period, it said.Instead, Citi reckons the most likely scenario would be a "major downsizing" of existing stores, though this does raise some uncertainties: "So far downsizing hasn't worked as demand from food retailers has faded. A more material downsizing could mean investors are asked to be patient for a number of years as Kingfisher looks to sublet the space."The stock was down 1.6% at 361.1p by 10:03.