Credit Suisse reiterates ‘underperform’ on Ocado, cuts price target

Credit Suisse reiterated its ‘underperform’ rating on shares of online supermarket Ocado on Tuesday and cut the price target to 1,500p from 1,550p as it said there was “little room for new optimism”.
The bank said it was revisiting its investment case “in the context of the Kroger announcement last week, AutoStore IPO finalisation and Erith 4Q21E capacity”.

Credit Suisse said there was no immediate upside from the Kroger announcement on 12 October, in which the US company said it was aiming to enter the Northeast through its e-commerce partnership with Ocado.

Kroger said it was planning to offer online grocery service in the region by building an Ocado-powered automated customer fulfillment center to fill digital orders for same-day and next-day delivery.

CS also said it was incorporating slower-than-initially-expected ramp-up at the Erith warehouse following the fire there.

“We think that Ocado has not been able to regain market share losses from 2020 capacity constraints due to 2021 disruption, while Purfleet and Bristol new capacity was mostly offsetting lower Erith volumes,” it said.

At 1315 BST, the shares were down 1.8% at 1,794.50p.

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