Share Prices & Company Research

Market News

01 Mar 2022 | 09:35

Berenberg lowers target price on Ocado

(Sharecast News) - Analysts at Berenberg lowered their target price on online grocery giant Ocado from 1,990.0p to 1,800.0p on Tuesday, stating that innovation implications were "underappreciated". Berenberg said benefits unlocked by Ocado Re:Imagined innovations had not been appreciated by the market, in its view, with cost-to-serve reductions likely to improve partner economics, providing scope for Ocado to benefit from fee upside.

The German bank, which reiterated its 'buy' rating on the stock, also noted that reduced robot capital intensity and faster capacity deployment had increased customer fulfilment centre valuations.

Berenberg stated that it believes liquidity concerns to be "overdone" and that Ocado's capital spend was creating "greater barriers to entry and unlocking new market opportunities".

"Ocado's £800.0m FY 2022E capex guidance has raised concerns around liquidity requirements. Reassuringly, Ocado has £1.5bn of cash and the first convertible is not due until FY 2026. However, we expect Ocado to sustain its innovation and if additional capital is required, debt financing is most likely," said Berenberg.

"We expect capital markets to be supportive, given clear innovation and demonstrated profitability at the proof of concepts Ocado Retail and Solutions UK. With £160.0m development capex in FY 2022E, almost four times as much as AutoStore has done in the past four years combined, Ocado's is increasing its competitive barriers and unlocking new market opportunities, improving its long-term outlook."
Get in touch today
Join Redmayne Bentley
Talk to us now about opening a new account or transferring your account from another provider
0113 243 6941
Get in touch today
Contact your local office
Contact your local office to find out more
The value of your investments and the income from them may go down as well as up, and you could get back less than you invested.