Ocado share price at risk as analysts predict a £410M loss
Advertisement
- Ocado stock price has collapsed by more than 80% from its all-time high.
- The company’s growth has been relatively slow in the past few years.
- Analysts expect the company’s loss will be £410 million.
Follow Invezz on Telegram, Twitter, and Google News for instant updates >
Ocado (LON: OCDO) share price has pulled back this year as concerns about the company’s future continued. The stock plunged to a low of 520p this week, its lowest level since November 14th. It has crashed by over 30% in the past 12 months, underperforming the FTSE 100 index, which has barely moved in that period.
Advertisement
Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.
Concerns about Ocado remains
Copy link to sectionOcado Group is a leading retail and technology company that is also one of the most shorted in the UK. The company has three primary businesses. Ocado Retail is a joint venture with Marks and Spencer. It also has Ocado Logistics and technology solutions.
Advertisement
Ocado has faced substantial challenges over the years as its cash burn has increased. Reports show the company had a net loss of over £500 million in the last financial year. It had lost £176 million and £52.3 million in the previous two years, respectively.
Ocado’s losses are mostly because of its investments in the warehouse business, which has not been growing faster than expected. The last deal the company announced came in November when it announced a partnership with McKesson Canada, its first non-retail customer.
The most recent results revealed that Ocado’s business is not growing as fast as one would expect. Its revenue rose by 9%in the first half of the financial year to £1.4 billion. This growth was driven by its technology solutions whose revenue rose by 59%.
Its EBITDA was only £17 million while its loss jumped to over £289 million. Most of this loss came from its significant depreciation and amortisation.
Therefore, the challenge for Ocado is that it lacks a clear path to supercharge its growth in the near and long term. For one, analysts expect that its UK retail business will continue growing at a slower pace.
The median estimate among analysts is that Ocado’s revenue came in at £2.76 billion in FY’23. Its retail business is expected to bring in £2.3 billion followed by £672 million and £412 million by logistics and technology divisions. Worse, analysts believe that the company’s profit before tax will be £410 million.
Ocado share price forecast
Copy link to sectionOcado has been one of the worst-performing stocks in the FTSE 100 index. It has dropped by more than 82% from its highest point in September 2020. The shares have formed a head and shoulders pattern on the weekly chart.
It has also crashed below the 50-week Exponential Moving Average (EMA). Therefore, the outlook for Ocado is still bearish ahead of its earnings on February 29th. If this happens, the next point to watch will be at 342p, its lowest level on June 5th.
Advertisement
Want easy-to-follow crypto, forex & stock trading signals? Make trading simple by copying our team of pro-traders. Consistent results. Sign-up today at Invezz Signals™.