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Ocado share price: Online grocer looks for new warehouses

Ocado (LON:OCDO) is hunting for two new distribution centres in an effort to capitalise on the surge in demand for online deliveries, The Sunday Times has reported. The news comes after Peel Hunt reaffirmed the online grocer as a ‘buy’ last week, saying that it was impressed by the level of cybersecurity and sheer amount of technology the group has to draw on.

Ocado’s share price rose in the previous session, gaining 0.69 percent to close at 846.60p, outperforming the blue-chip FTSE 100 index which added 22.81 points to close 0.32 percent higher at 7,049.80 on Friday. The group’s shares are up by a little more than 190 percent over the past year, as compared with about a 6.3-percent dip in the Footsie.

Ocado looking for warehouses

The Sunday Times reported yesterday that Ocado was understood to be looking for one warehouse between London and Birmingham, and another in the north of England within easy reach of customers in Liverpool, Manchester and Leeds. The new warehouses will ease capacity constraints, but, the newspaper notes, will do little to quell detractors who say the company’s low profits do not justify its hefty investments. The latest warehouses are likely to be expensive, with the boom in online shopping driving up prices for well-located sites.

Earlier this month, Kantar Worldpanel disclosed that Ocado’s UK grocery sales had growth 7.5 percent in the 12 weeks to October 7, ahead of the market.

Analysts on online supermarket

The 15 analysts offering 12-month price targets for Ocado for the Financial Times have a median target of 1,020.00p on the shares, with a high estimate of 1,700.00p and a low estimate of 460.00p. As of October 20, the consensus forecast amongst 19 polled investment analysts covering the blue-chip group has it that the company will outperform the market.  

As of 07:58 BST, Monday, 22 October, Ocado Group PLC share price is 846.60p.

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