Barclays downgrades Ocado to 'underweight'
Barclays downgraded its recommendation on Ocado shares to ‘underweight’ from ‘equalweight’ on Monday, as it argued the company is well placed to benefit from a rise in online demand due to the coronavirus pandemic but the stock is expensive.
Food & Drug Retailers
4,369.80
15:45 15/11/24
FTSE 100
8,060.61
15:45 15/11/24
FTSE 350
4,453.56
15:45 15/11/24
FTSE All-Share
4,411.85
15:45 15/11/24
Ocado Group
322.30p
15:45 15/11/24
The bank, which lifted its price target to 1,600p from 1,200p, pointed out that one of the most obvious effects of the Covid-19 crisis on the grocery sector has been the dramatic step-up in demand for online groceries.
"This should be good news for Ocado, both as an online grocery retailer and as a provider of online grocery solutions to other grocers," it said.
“What is more difficult to determine is whether the surge in the share price fairly reflects growth in the market opportunity. Our analysis - although we concede that it is hard to be scientific at this still-early stage of Ocado's development - suggests that a market cap of £16bn is excessively generous, and we cut our stock rating to underweight."
At 1050 BST, the shares were down 0.8% at 2,223.00p.