Ocado surges after double upgrade from Credit Suisse

Ocado surged to the top of the FTSE 100 on Wednesday after Credit Suisse upgraded shares of the online supermarket to ‘outperform’ from ‘underperform’ and hiked its price target to 1,750p from 1,500p as it argued that current levels offer a buying opportunity.

The bank cited greater confidence in the depth of existing partnerships after the launch of Ocado Re:Imagined and potentially higher TAM (total available market) for new and more flexible solutions.

CS said a share price correction of around 50% over the last 12 months reflects key risks and the bank’s key concerns, suggesting limited downside.

It said the reimagined Ocado Smart Platform allows deeper relations with existing partners. Credit Suisse increased its existing partnership capacity by 20% and added another £2bn in sales with US-based Kroger.

As far as the broader TAM is concerned, CS said it expects the same capacity with new partners as before, but sees a higher likelihood of several - likely small - partnerships being signed in 2022-23, given that the new platform can be combined with in-house web solutions, does not require large customer fulfilment centres and requires less than $50m+ initial capex.

At 0955 GMT, Ocado shares were up 7.1% at 1,532.50p.