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Ocado's Share Price Rise Prompts Scepticism At Bernstein

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Ocado's Share Price Rise Prompts Scepticism At Bernstein

Online-only grocer Ocado's share price has been on the rise after rumours, first reported in the Britain's Daily Telegraph, linking the online retailer to a deal with Marks & Spencer. However, analysis from research and brokerage firm Bernstein paints a less optimistic picture.

Bruno Monteyne, an analyst at Bernstein has suggested that if an agreement were to be reached, the service offered would likely to be an in-store-pick solution rather than a central fulfilment option.

His logic is based on the fact that M&S customers tend to favour smaller orders, which Monteyne suggests makes the central fulfilment option economically unviable.

The Bernstein analyst predicted that the in-store pick solution is less profitable to Ocado due to strong competition in the market from start-ups and other providers.

He speculated that a deal would only be likely to bring in £2 to £4 million (€2.38-€4.73 million) as compared to the £12 million (€14.2 million) Ocado has made from Morrisons in each of the previous three years.

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While Ocado's share prices are performing well on the London Stock Exchange amid the rumours, Bernstein predict that Ocado will underperform with a price target of £1.90 (€2.24).

© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Gavin Ryan. Click subscribe to sign up to ESM: The European Supermarket Magazine.

 

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