Hargreaves Lansdown argues that US e-commerce giant Amazon’s move into groceries will provide a tailwind for Ocado (LON:OCDO), Citywire has reported. The comments came after the FTSE 100 group updated investors on its half-year performance yesterday, revealing that it had made a loss.
Ocado’s share price was volatile in the previous session, closing 9.05 percent higher at 1,103.00p following an initial slump. The group was the FTSE 100’s top gainer in percentage terms, with the benchmark index adding 4.05 points to close 0.05 percent higher at 7,692.04.
HL weighs in on Ocado’s results
Citywire quoted Hargreaves Lansdown analyst George Salmon as commenting yesterday that the fall in Ocado’s half-year profits was ‘a blot on the copybook’ but not a problem. The online grocer reported yesterday that its earnings before interest, taxes, depreciation and amortisation had fallen 13.9 percent to £38.9 million. The group further posted a loss before tax of £9 million for the first half of its financial year, as compared with a £7.7-million profit in the prior-year period.
“With the group in the midst of a dramatic transformation, the investment case at Ocado is all about what lies ahead,” Salmon pointed out, adding that the spate of deals that the online grocer was signing was due to fears that Amazon is making moves into online groceries and supermarkets around the world are looking to boost their online presence ‘with a new sense of urgency’”.
Other analysts on online grocer
Royal Bank of Canada reaffirmed Ocado as a ‘sector perform’ yesterday, valuing the shares at 750p, while Peel Hunt continues to see the company as a ‘buy,’ without specifying a price target on the stock. According to MarketBeat, the online grocer currently has a consensus ‘hold’ rating and an average valuation of 558.43p.