Downgrade cycle appearing over was our main takeaway from the 1H25 results in mid-September as management tightened its FY25 adjusted PBT guidance range to £510m to £550m, from a previous range of £490m to £550m set back in March at its FY24 results. Upgrading FY25E/FY26E PBT expectations by 3.6%/3%, reflecting the 1H25 beat and narrowing of management’s guidance towards the top of the previous range. Geared into improving consumer discretionary spending – the company is well positioned to benefit from operational leverage when discretionary spending recovers given market share gains and/or efficiencies. While such a shift to more discretionary spending is yet to be seen, apart from in Poland, the macro backdrop appears to be on an improving trend in its key territories. A recovered margin scenario analysis suggests our FY27E earnings forecast and consensus could be 37% to 53% too low, with upside risk to forecasts if a consumer recovery does come through. The current assumed number of shares, which may vary given Kingfisher’s share buyback, implies a recovered EPS range of 38p to 43p for FY25-FY27. Reiterate BUY with our TP raised to 387p (from 285p), reflecting a change in our TP methodology to a present value multiple of recovered earning (prev. 12x CY25E PE) given how difficult it is to forecast a cyclical recovery. Taking the midpoint of our recovered earnings scenario and applying a multiple to earnings of 12x (the 10-year average forward PE for Kingfisher) implies a recovered medium-term TP of 487p. Discounting this back at an 8% discount rate for 3 years results in our new TP of 387p.