The share price of the FTSE 100 constituent Ocado Group (GB:OCDO) fell by 4.5% today at the time of writing after the stock received another Sell rating. Analysts at Barclays downgraded the rating on the stock from Hold to Sell, while reducing the price target from 680p to 430p. The price target now implies a downside of more than 15% to the share price.
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Ocado Group is a globally recognized technology-driven company known for its proficiency in software and robotics platforms. It offers comprehensive end-to-end solutions for online grocery services on a global scale.
The Downgrade
Barclays cut its rating as it believes the international CFC (customer fulfillment centers) roll-out delays have impacted the company’s medium-term guidance. This implies execution risks for the company towards achieving higher profitability.
Barclays is also skeptical about the increasing competitive pressures on the company, which is also one of the headwinds for the stock. It added that the upcoming debt maturities for the company in FY25–26 raise refinancing concerns for the company in a higher interest rate environment.
This downgrade came after analyst Andrew Gwynn from BNP Paribas Exane also downgraded his rating to sell three weeks ago, leading to a sharp decline of around 20% in the share price. Gwynn is bearish about the stock, mainly due to the slower growth of its retail business. Gwynn changed his outlook on the stock after upgrading his rating on the stock back in June 2023, mentioning it as a good investment option. However, it then changed its stance in September, stating the stock was “overvalued.”
Contrary to these Sell ratings, 12 days ago, analyst William Woods from Bernstein maintained his Buy rating on the stock with a forecast of a huge upside of 164% in the share price. Woods is bullish on the stock considering Ocado’s strong partner relationships, opportunities for new deals, and positive cash flow.
Share Price Volatility
Ocado Group’s stock experienced a surge during the lockdown, reaching a record level above 2,800p in 2020. However, by June 2023, the price had dropped to around 300p. Over the last three months, the stock has lost around 8% and is currently trading above 500p.
The recent volatility in the share price reflects concerns over the company’s future prospects. Moreover, the different viewpoints from analysts lead to ambiguity, creating challenges for investors in assessing the true value of the stock.
What is the Price Target for Ocado Stock?
According to TipRanks’ analyst consensus, OCDO stock has received a Moderate Sell rating. The stock has four Sell, one Hold, and one Buy recommendations from analysts. The Ocado share price forecast is 638.5p, which is almost 25.4% lower than the current price level.
