Ocado's shares fall as Goldman cuts target price

22nd Dec 2016 08:53

(ShareCast News) - Ocado Group's shares fell as Goldman Sachs reiterated a 'buy' rating but cut its target price to 440p from 450p.The bank said it still believes Ocado is the best-placed grocer in its coverage to take advantage of, and drive, the channel shift to online grocery.However, due to inflationary pressures on the UK grocery market Goldman has lowered its full year 2016-2018 earnings before interest, tax, depreciation and amortisation (EBITDA) forecasts to £84.9m from £85.4m, £92m from £101m and £108m from £130, respectively. The earnings per share estimates drops to 1.8p from 1.9p in 2016, a loss per share of 0.4p from EPS of 2.5p in 2017 and a LPS of 0.2p from EPS of 4.1p in 2018.A weaker pound following the Brexit vote will make imports more expensive for grocers, presenting a challenge for the sector.Goldman added: "Key risks include weaker-than-expected sales growth from Ocado.com, a further material deterioration in the UK grocery market and continued escalation in central costs."Shares fell 1.05% to 253.30p at 0929 GMT.