Ocado shares skyrocketed 19% on Tuesday as the grocery tech group exceeded City expectations in the very first half, however experts stay spilt over future potential customers.
The latest dive to 694p follows market whispers of prospective interest from Amazon assisted the stock recuperate from a June low of 343p to 595p prior to the outcomes for the 6 months to 28 May.
Investors were positive regardless of pre-tax losses expanding from £211.3m to £289.5m year on year as group earnings increased 9% to £1.4bn – driven by a 59% dive at the innovation department to £198.2m and 5% for retail to £1.2bn.
Stripping out remarkable and financing expenses, Ocado moved from a hidden loss a year ago to an EBITDA revenue of £16.6m.
And regardless of recent public declarations of disappointment by Archie Norman and Stuart Machin at online partner M&S, Ocado employer Tim Steiner indicated “good progress” at the retail arm and went back to success in the 2nd quarter.
Bernstein expert William Woods said hidden client principles at Ocado Retail were “good”, with profits up 5%, strong client development and success enhancing faster than anticipated with 3 successive months of positive EBITDA.
“Many say Ocado is a ‘jam tomorrow’ story, but we had a bit more jam and a little sooner than expected,” he included.
No problem assisted the shares, Woods said. “Investor sentiment skews negative on Ocado in the short term and there is high short interest. Given the fears over liquidity, no bad news is good news at this stage.”
Brokers at Peel Hunt likewise updated their target rate for the stock to 845p from 568p and maintained the ‘buy’ suggestion.
Danni Hewson, head of monetary analysis at AJ Bell, said a bear on Ocado would indicate “ongoing pre-tax losses, continued slow pace in signing up new partners and pedestrian gains in the total number of active customers for its UK retail operations”.
“That life isn’t getting any worse for the company is enough to satisfy the market,” she included. “Although, what matters to most investors is whether Ocado remains a takeover target.”
Long-time Ocado bear Clive Black of Shore Capital said: “The numbers remain grim, time is running out for this story, with the jam drying up.”
He included the share rate bounce was the outcome of “what can only be characterised as spoof bid stories”.
