MARKET REPORT: Ocado falls 10% as ‘last bull’ loses hope

Ocado investors suffered further losses as City analysts questioned whether the online retailer should remain a listed company.

Just a day before its half-year results, it fell 10.4 percent, or 39.60 pence, to 340.40 pence in its worst day on the stock market in two years.

The sell-off came after analysts at Bernstein, which had been “one of the last bulls standing” in its belief in Ocado, attacked the stock.

The investment bank cut its rating from ‘outperform’ to ‘underperform’ and reduced its target price from 1,000p to 260p.

“The jam-tomorrow story is now less jam, more tomorrow,” the analysts said, warning that the next three years could be tough for Ocado as online sales failed to recover after the pandemic.

The stock hit a record high of 2,895p in September 2020 but has since fallen nearly 90 per cent and last month left the FTSE 100 after six years.

Bernstein said Ocado’s automated warehouses had struggled to meet expectations, while partnerships with retailers such as M&S had proven difficult.

He added: “We question whether the cultural fit of a high-performing tech company like Ocado works well with slow-moving traditional supermarkets.”

Bernstein now questions whether the public market is the “right place for Ocado.” He said the best option was for Ocado to be acquired by U.S. retailer Kroger.

Meanwhile, the FTSE 100 ended the day down 0.9 per cent, or 69.95 points, at 8,182.96, and the FTSE 250 ended the day down 0.1 per cent, or 13.37 points, at 21,189.52.

Chemicals group Croda fell among the blue-chip stocks after JP Morgan downgraded its rating. The shares fell 2.5 percent or 101 pence to 3,973 pence.

A US hedge fund has disclosed a 10 per cent stake in Rosebank Industries less than a week after it was listed on the London Stock Exchange.

Dallas-based Permian Investment Partners is now the largest shareholder in the firm, which is run by six former Melrose corporate raiders who hope to repeat their successes by following the “buy, upgrade, sell” model that proved so lucrative last time around.

The six bought £5m of shares at 250p each at the time of listing. Those shares, which also represent 10 per cent of Rosebank, are now worth £14.3m after the stock rose 5.9 per cent or 40p to 715p.

Cavendish Financial, born from the merger of stockbrokers Cenkos and FinnCap last year, racked up losses of £3.9m in the 12 months to the end of March due to rising staff costs.

It also cut its dividend, sending shares down 8.4 percent or 1.15 pence to 12.5 pence.

In the Middle East, demand for washing machines and photo booths in supermarkets and petrol stations has skyrocketed.

Revenue rose 4.6 per cent to £150.4m, while profits rose 10.3 per cent to £30m in the first half to the end of April.

It aims to install 80-90 washing machines a month and 2,000-2,500 photo booths by the end of its financial year, but its shares fell 0.8%, or 1.4p, to 180.40p.

Molecular diagnostics company Genedrive has moved closer to U.S. regulatory approval for a kit that aims to prevent babies from going deaf.

The test detects a genetic variant in babies that puts them at risk of hearing loss if they are given an antibiotic. The shares rose 31.4 percent or 0.88 pence to 3.68 pence.