MARKET REPORT: Only the start for ‘partner of choice’ Ocado

Grocery delivery giant Ocado got a boost after a broker branded it the ‘partner of choice’ for supermarkets looking to cash in on the online shopping boom accelerated by the pandemic.

Analysts at Jefferies said online shopping ‘has a long way to go’, noting that in the UK groceries bought online were still only 12 per cent of the total, but adding that many supermarkets would need to re-engineer business models to deliver groceries to customers, incurring expenses ‘beyond the appetite’ of many.

As a result, these firms need ‘a partner with a heritage in grocery [and] automation’. ‘In our view, Ocado remains a partner of choice in this regard,’ analysts said.

Tipped: Broker Jefferies upgraded Ocado to ‘hold’ from ‘underperform’ and nearly doubled their target price to 1850p from 950p. The stock rose 0.8%, or 13p, to 1633.5p

Jefferies noted that Ocado’s partnership with Marks & Spencer, signed in 2019, was ‘proof of the pudding’ for its ability to run an effective online delivery service. 

The firm’s technology arm, which provides robots that can pack orders automatically, was an ‘economically viable’ option.

The broker upgraded Ocado to ‘hold’ from ‘underperform’ and nearly doubled their target price to 1850p from 950p. The stock rose 0.8 per cent, or 13p, to 1633.5p.

The FTSE 100 dipped 0.04 per cent, or 2.85 points to 7337.05 while the FTSE 250 fell 0.04 per cent, or 7.74 points, to 23,230.43. 

Stock Watch – Equals Group

Shares in Equals Group traded near a two-year high after it said it had ‘significantly exceeded’ expectations.

The international payments and money transfer firm raked in revenues of £40.4million in the year to date – 51 per cent higher than the same period in 2020 – with takings more than doubling across October and November to £11.6million.

Its numbers were boosted by a transaction with a ‘large corporate client’ during the period which had generated £1.5million in revenues. The shares rose 8.7 per cent, or 5.5p, to 68.5p.

 

Markets were unnerved by the seemingly imminent return of Covid restrictions in the UK, with the Government planning to introduce vaccine passports and order people to work from home once again.

Games Workshop, maker of Warhammer battle figurines, took a hit after higher costs ate into profits, which, for the six months to November 28, are expected to be at least £86million, down from £91.6million in the same period a year ago.

Revenue is expected to hit at least £190million, from £187million. It slid 0.7 per cent, or 70p, to 9690p after it revealed a deal with virtual reality firm Nexon to develop games based on Warhammer properties.

British Gas owner Centrica struck an £800million deal to sell its Norwegian oil and gas assets as part of plans to slim down. The sale includes the Statfjord oilfield at the UK-Norwegian boundary in the North Sea.

Shares ticked down 0.2 per cent, or 0.1p, to 67.58p.

Mid-cap miner Centamin posted the biggest increase in gold reserves in a decade at a mine in Egypt of more than 1m ounces.

The expansion underpins the plans to produce 500,000 ounces per year over the next decade.

However, the shares fell 0.8 per cent, or 0.74p, to 91.38p after analysts at broker Liberum said the increased gold reserves would be overshadowed by higher costs.

AIM heavyweight Clinigen agreed to a £1.2billion takeover deal with UK private equity firm Triton Investment Management.

The pharma group’s shareholders will receive 883p in cash for each share they hold, a 41 per cent premium to the closing price on December 1, the day before the offer was first announced. 

The shares were up 11.3 per cent, or 92.5p, at 910p, suggesting investors may be expecting a higher bid to appear.

Meanwhile, mid-cap oiler Diversified Energy lifted 2.8 per cent, or 2.8p, to 104.6p after a 32 per cent rise in its credit limit was approved by lenders.

It now has access to £623million from banks, which was attributed to a recent hike in oil and gas prices and an acquisition.

Blue-chip chemicals firm Croda rose 2.2 per cent, or 225p, to 10,285p after UBS upgraded the stock to ‘buy’ from ‘neutral’, saying they expected higher than expected earnings in 2022.

This post first appeared on Dailymail.co.uk