MARKET REPORT: Ocado shares surge as investors bet on rebound
Ocado shares rose as analysts saw improvement in its fortunes.
BNP Paribas Exane told its clients that the outlook and market sentiment of online supermarket FTSE 100 are much more aligned.
The broker, who also said Ocado has gotten a better handle on controlling its expenses and operating costs, raised its rating to “neutral” and raised the target price by 3 percent to 365p.
Shares, which were up as much as 10 percent at one point, closed 3.6 percent, or 14p higher, at 400.6p.
“However, we believe that after the pandemic has struggled to grow volume and excess capacity, Ocado is entering a more solid phase,” the broker added.
New rating: BNP Paribas Exane said Ocado has gained more control over the management of its expenses and operating costs
Ocado was one of the winners of the lockdown, with its share price hitting a record 2895 pence in September 2020. But it seems to have been in free fall for the past two years and last week it dropped to a low of 343 pence.
BNP insisted that Ocado still has a lot to prove and warned that the outlook for online grocery “remains challenging to predict.”
The group narrowly escaped a start from the FTSE 100 index in the latest rebalancing.
The FTSE 100 rose 0.1 percent, or 8.33 points, to 7570.69 and the FTSE 250 gained 0.5 percent, or 99.15 points, to 19190.81.
Oil prices fell more than 4% to $72 a barrel on renewed fears about the global economy.
Oil company BP fell 1.3 percent, or 6.3 pence, to 462.6 pence and Shell lost 0.7 percent, or 16.5 pence, to 2,278 pence. In the FTSE 250, Tullow Oil fell 2.7 percent, or 0.7p, to 25.02p and Harbor Energy fell 2.2 percent, or 5.6p, to 245.4p.
Crest Nicholson led a rally among homebuilders after UBS upgraded its rating from “sell” to “neutral” and raised its price target from 210 pence to 245 pence.
Stock watch – Futura Medical
Shares of Futura Medical soared after US regulators approved the over-the-counter sale of its erectile dysfunction treatment gel.
The pharmaceutical company’s MED3000 product can work in under ten minutes and is available without a prescription and offers an alternative to oral medications such as Viagra.
It is already sold in the UK in Boots stores under the brand name Eroxon.
The product is also available in Belgium. Shares rose 12.4 percent, or 5.3 pence, to 48.2 pence.
The investment bank said house prices held up better than feared alongside an increase in demand. Shares added 2.2 percent or 5 pence to 234 pence.
But Thungela Resources dipped into the red after the company, which spun off from blue-chip mining giant Anglo American in 2021 (up 1.7 percent, or 40.5 pence, to 2416.5 pence), warned of a sharp decline in the coal prices and ongoing problems with the South African state operator Transnet Freight Rail (TFR).
Group earnings were impacted by weaker demand from China alongside lower gas and coal prices. Shares fell 1.4 percent, or 8.6 pence, to 589.4 pence.
Shares of Croda International rose as the stock recouped some of the losses it took after last week’s profit warning.
On Friday, the chemical group said profit for the year to the end of May was likely to be in the range of £370m to £400m, less than the £440m analysts had expected. That sent shares down more than 12 percent.
But the stock recovered slightly yesterday, rising 3.2 percent, or 168p, to 5442p.
Travel stocks were in high demand as Carnival was upgraded by analysts from Bank of America and JP Morgan.
The brokers said there was little sign of slowing momentum in the international cruise line business.
Shares rose 12.7 percent, or 115.1p, to 1024.5p.
Wizz Air added 4.3 per cent, or 117p, to 2842p after JP Morgan raised its target price from 3750p to 4050p, and holiday group Tui gained 3.6 per cent, or 20p, to 571.5p.
There was less cause for celebration for the real estate sector, however, as Goldman Sachs issued a gloomy outlook for the central London office market.
The broker downgraded its ratings for real estate investment and development companies Segro – from “neutral” to “buy” – and Great Portland Estates – to “sell” from “neutral”.
Shares of Segro fell 2.7 percent, or 21.2 pence, to 779.4 pence, and Great Portland Estates fell 2.4 percent, or 11.6 pence, to 472.4 pence.
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