Kesko Advances as Danske Says Buy on Turnaround: Helsinki Mover

Kesko Oyj (KESBV), Finland’s largest publicly traded retailer, climbed the most in four months after Danske Bank A/S (DANSKE) recommended clients buy the stock as cost cuts and recovering sales promise to reverse a decline in earnings.

Kesko rose as much as 3.3 percent, the biggest intraday gain since Oct. 26. Shares in the Helsinki-based company traded up 2.9 percent at 24.37 euros at 10:59 a.m. in the Finnish capital, the best performance among Finnish benchmark stocks. About 80,000 shares traded, almost half the three-month daily average, according to data compiled by Bloomberg.

The retailer expects to achieve most of its 100 million euros ($131 million) cost saving target this year, Chief Financial Officer Jukka Erlund said on Feb. 5. The company’s fourth-quarter profitability was impacted negatively by expansion in neighboring Russia, he said. Kesko posted a decline in fourth-quarter pretax profit to 53 million euros from 74 million euros a year earlier.

“We believe that the declining earnings trend of the past five quarters is about to reach a turning point,” analysts at Danske Bank said today in a note. “This enables us to focus on the attractive valuation potential.”

Danske Bank upgraded their recommendation to buy from hold and raised the 12-month price target for Kesko to 30 euros from 25 euros.

To contact the reporter on this story: Kasper Viita in Helsinki at kviita1@bloomberg.net

To contact the editor responsible for this story: Christian Wienberg at cwienberg@bloomberg.net