Peel Hunt reckons that Ocado (LON:OCDO), the ‘Microsoft of retail’, could be turning into Google-owner Alphabet, Citywire reports. The comments came after the company updated investors on its interim performance yesterday, posting wider loss but cheering investors with higher retail revenues.
Ocado’s share price rallied in the previous session as investors digested the results, gaining about 5.6 percent to close at 1,236.50p, outperforming the benchmark FTSE 100 index which ended trading 0.17 percent lower at 7,536.47 points. This morning, the shares have fallen into the red, having given up 0.89 percent to 1,225.50p as of 08:07 BST, as compared with about a 0.15-percent fall in the Footsie.
Peel Hunt weighs in on Ocado
Citywire quoted Peel Hunt’s analyst James Lockyer as commenting that the increase in Ocado’s deal fees was “the key performance indicator that investors should focus on” with the company making “the dramatic transformation from a transactional online retailer to a software and deep tech hardware business”.
“With its venture arms continuing to invest in complementary, adjacent, and brand new tech, funded by the success of its first innovation – including its deal with M&S – it feels like Ocado could be turning into Alphabet,” the analyst pointed out.
Other analysts on FTSE 100 grocer
Nicholas Hyett at Hargreaves Lansdown meanwhile commented in a note that Ocado’s future was a lot more ‘futuristic’ than delivering groceries.
“It shouldn’t be forgotten that recent performance exceeded expectations though, and we think Ocado’s cutting edge technology still has the ability to entice new partners,” the analyst pointed out.
Royal Bank of Canada reaffirmed the blue-chip grocer as a ‘sector perform’ yesterday, with a valuation of 1,000p on the shares. According to MarketBeat, the online grocer currently has a consensus ‘hold’ rating, while the average target of the Ocado share price stands at 1,150p.