How high can the Ocado share price possibly go?
Ocado shares have rallied 42% since mid-March after the stock saw revenue growth double amid panic buying due to the coronavirus pandemic.
Ocado shares have rallied 42% since mid-March after the company saw revenue growth double amid panic buying due to the coronavirus pandemic.
In its first quarter (Q1), the online retailer saw revenue growth double, with consumers opting to stockpile food in reaction to the Covid-19 outbreak and subsequent nationwide lockdown.
‘The impact of higher basket values and order demand, amid growing public concern over the coronavirus, was limited in the quarter, although this has since picked up significantly and growth in the second quarter is so far double that of the first quarter,’ the company said in a statement.
The company said that Q1 revenue increased by 10.3% to £441.2m, with sales spiking so much that the retailer was forced to temporarily shut down its online store and stop taking new customer registrations due to ‘unprecedent strain’ on the business.
Ocado did also mention that it expects ‘the impact of forward buying, however, to unwind at some point’.
Ocado is trading at £15.44 a share as of 13:35 (GMT) on Wednesday.
Bernstein reiterates ‘outperform’ rating for Ocado
Analysts at Bernstein remain optimistic about Ocado’s share price trajectory, with the US-based brokerage reiterating its ‘outperform’ rating for the stock in March and upgrading its target price to £17 a share.
Based on Ocado trading at £15.44 a share, analysts at Bernstein believe the stock has a potential upside of 10.1%.
Analysts at JP Morgan also upgraded their rating for the stock from ‘neutral’ to ‘underweight’. But despite improving their price target for Ocado to £14 a share, it implies the share price will fall in value by 9.3%.
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