Ocado expected to report stronger Christmas
Ocado’s fourth quarter trading statement on 16 January to shed light on online supermarket’s performance.
Ocado expected to report stronger Christmas
Ocado’s fourth quarter (Q4) trading statement on 16 January to shed light on online supermarket’s performance.
Online supermarket Ocado is expected to have had a good Christmas overall, but the driver of gains in 2024 is likely to come from further deals for its solutions business. The company’s Q4 trading statement on Tuesday is expected to share more light on how it is doing.
Supermarkets had a successful Christmas period, with Ocado reporting a 5.5% increase in sales for the four weeks leading up to Christmas Eve. However, it is important to determine whether this growth is driven by increased volume or higher prices. As a premium brand, Ocado may have offered more discounts to attract customers.
The impact of Ocado's partnership with M&S is still uncertain and its full effects are yet to be seen. It remains to be seen how this collaboration will contribute to Ocado's performance in the future.
It is worth noting that Ocado is primarily known for its technology solutions rather than being a traditional supermarket. Therefore, securing more deals in 2024 will be crucial for driving the company's share price growth.
Overall the company’s growth has yet to translate into sustainable profits, something that continues to hinder sentiment towards Ocado.
Technical analysis on Ocado share price
Ocado, the darling stock for short sellers in 2021 and 2022, began the new year on a negative note, slipping by nearly 15% since the beginning of the year and by nearly 20% from its 798.80 pence December peak.
Just like in January 2023 when the Ocado share price was also trading around the 800 pence mark, the Ocado share price is being pushed down again.
It remains within a long-term downtrend and would need to overcome the July 2023 high at 1,017p for this to change.
OCADO Weekly Candlestick Chart
The fact that the November-to-January uptrend line at 704p has been slipped through on Wednesday does not bode well for the bulls.
The next downside target zone is made up of the mid-October and mid-November highs as well as the 55- and 200-day simple moving averages (SMA) at 618.4p to 605.8p. Were it to be slipped through, the October low at around the 450p mark could be back in focus.
OCADO Daily Candlestick Chart
For any bullish reversal to have a chance, this week’s high at 752.4p and the 2021 to 2024 tentative downtrend line at 756p would need to be exceeded. Ideally the December peak at 798.8p as well.
Analysts recommendations and IG sentiment
Fundamental analysts are rating Ocado as a ‘hold’ with Refinitiv data showing 6 strong buy, 5 hold and 7 sells - with the mean of estimates suggesting a long-term price target of 677.50 pence for the share, roughly 4% above the share’s current price (as of 12 January 2024).
IG sentiment data shows that 88% of clients with open positions on the share (as of 12 January 2024) expect the price to rise over the near term, while 12% of clients expect the price to fall. Trading activity of IG’s clients today shows 62% of buys and this week 56% of buys.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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