Credit Suisse downgrades Ocado, slashes price target

The bank said it was revising its model assumptions following the capital raise and in line with new disclosure provided by the company at its recent modelling seminar as well as medium-term and short-term targets confirmed by Ocado.

"Our target price change is primarily driven by: (i) changes in generic customer fulfilment centre (CFC) economic assumptions; (ii) effect from the capital raise; (iii) reallocation and better visibility of central cost and Technology cost; (iv) increased WACC assumption from 8.3% to 8.5%; and (v) changes in retail valuation," it said.

CS said it was broadly in line with the mid-term guidance given by the company.

The bank said it sees no further capital raise need and expects Ocado to turn free cash flow positive in 2026. It also sees around $14bn of Kroger sales to be fulfilled through Ocado facilities.

A lack of immediate catalysts might be an issue for investor confidence, while a number of new partnerships signed would be positive, it said.

At 1050 BST, the shares were down 1% at 861.80p.