{"id":113454,"date":"2026-08-10T00:11:27","date_gmt":"2026-08-10T00:11:27","guid":{"rendered":"https:\/\/www.europesays.com\/ch\/113454\/"},"modified":"2026-08-10T00:11:27","modified_gmt":"2026-08-10T00:11:27","slug":"ubs-cuts-ocado-target-by-a-third-as-growth-path-stays-clouded","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ch\/113454\/","title":{"rendered":"UBS cuts Ocado target by a third as growth path stays clouded"},"content":{"rendered":"

\"UBS<\/a> UBS cuts Ocado target by a third as growth path stays clouded Proactive uses images sourced from Shutterstock <\/p>\n

UBS has cut its price target on Ocado Group PLC (LSE:OCDO)<\/a>\u00a0to 230p from 340p, a 34% reduction that reflects less confidence in the timing and scale of new contract wins rather than any change to its neutral rating. <\/p>\n

The shares closed at 212p on Wednesday, leaving barely 9% of implied upside. <\/p>\n

Analysts Sreedhar Mahamkali and Angelo Mangieri framed the problem in the note’s title: better visibility on cash than growth. <\/p>\n

On cash, they are largely reassured. <\/p>\n

Ocado expects to turn cash flow positive towards the end of the second half, with a \u00a3200 million outflow for the full year and positive cash flow in 2027. <\/p>\n

UBS believes management is focused on delivering the \u00a3150 million of planned cost savings and cutting technology spend, and has aligned its own forecasts with that guidance. <\/p>\n

On growth, the picture is murkier, and the headline numbers flatter it. <\/p>\n

The Kroger and Sobeys warehouse closures generated \u00a3353 million of one-off revenue and a \u00a3351 million benefit to adjusted earnings in the first half, lifting reported group adjusted earnings to \u00a3432 million against \u00a381 million excluding the settlements. <\/p>\n

Those payments also remove recurring fee income, roughly $50 million from Kroger and \u00a37 million from Sobeys. <\/p>\n

Strip out the one-offs and UBS has cut its technology solutions revenue forecast by 13% for this year and 6% for the two years after, with earnings estimates down 15% and 11%. <\/p>\n

Average live modules have fallen to 115 from 122 a year earlier, and technology solutions margins slipped to 23.3% in the first half from 26.3%. <\/p>\n

UK logistics was the bright spot, with revenue forecasts nudged up 3% on the strength of the retail joint venture and cost recovery. <\/p>\n

The valuation change goes beyond the forecast cuts. <\/p>\n

UBS lowered its terminal growth assumption to 1% from 2% and raised its equity risk premium to 8%, taking the weighted average cost of capital to 9.4% from 8.5%. <\/p>\n

That alone accounts for much of the target price reduction, with the technology solutions arm now valued at \u00a31.49 billion against \u00a32.77 billion previously. <\/p>\n

The strategic hope is store-based automation, which Ocado pitched heavily on the results call as an answer to capacity constraints in American online grocery. <\/p>\n

The company says it has more than 10 active discussions. <\/p>\n

UBS calls the economics attractive but the proposition pre-commercial, and wants evidence of a successful deployment before crediting it. <\/p>\n","protected":false},"excerpt":{"rendered":"UBS cuts Ocado target by a third as growth path stays clouded Proactive uses images sourced from Shutterstock…\n","protected":false},"author":2,"featured_media":113455,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[129],"tags":[55241,1550,48914,55242,32943,55240,5255,223],"class_list":["post-113454","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ubs","tag-angelo-mangieri","tag-cost-savings","tag-ocado","tag-positive-cash-flow","tag-revenue-forecasts","tag-sreedhar-mahamkali","tag-target","tag-ubs"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ch\/117068318799739901","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/113454","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/comments?post=113454"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/113454\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media\/113455"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media?parent=113454"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/categories?post=113454"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/tags?post=113454"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}