Online grocer Ocado has slipped nearly 2% on an up day for the market following a broker downgrade.
Its shares have performed strongly since it announced a link-up with supermarket group Morrisons, especially once its relationship with Waitrose seemed to be unimpaired by the move. But analysts at Exane BNP Paribas think it could now be time to bank some profits. The bank's Andrew Gwynn cut his rating from outperform to neutral with a 300p price target, saying:
Ocado's technology is unique and as far as we're aware, isn't close to being replicated. We see potentially huge value in the model and believe the business could in time be game changing.
However, we don't see imminent catalysts for the shares as Ocado spends the next year getting Morrison online and next few years making its model more digestible for other partners. A buyout remains possible but Ocado may not be immediately on Amazon's shopping list as it develops its own technology. Accordingly, after a strong run, we expect a breather and cut our rating to neutral.
Ocado is currently 6.1p lower at 318.9p. Elsewhere TalkTalk Telecom is down 6.9p at 245.1p after its results while Carpetright has lost 17p to 660p in the wake of Tuesday's figures, where it blamed disappointing sales on the heatwave.
