Berenberg lowers target price on Ocado

Berenberg said Ocado's earnings and sentiment were being affected by headwinds facing its retail business, although it pointed out that the division was not the long-term driver of the group's valuation.

The German bank stated Ocado Solutions, the group's e-commerce technology unit, remained on track, was "well positioned" to navigate inflationary pressures, and added that its recent capital raise had eliminated funding concerns.

"We believe Ocado's ecosystem of grocery e-commerce solutions is best in class, and we expect more deals from both existing and new partners. We lower our price target to 1,290.0p (from 1,415.0p) to reflect the capital raise and lower value attributed to Ocado Retail," said the analysts, who reiterated their 'buy' rating on the stock.

"Excluding Ocado's 50% stake in Ocado Retail, which we value at £753.0m (91.0p per share), Ocado Solutions trades on c20x FY 2025E EV/EBITDA; however, these estimates incorporate no future deals and attribute no value to Ocado's other ventures (ie Oxbotica, non-food retail optionality, and vertical farming, among others)."

Reporting by Iain Gilbert at Sharecast.com