UBS cuts Ocado to neutral on partnership speculation

17th Jul 2015 11:27

(ShareCast News) - UBS has cut its rating for Ocado, but raised its price target to 480p.The bank said it was supportive of the online grocery store's business model but the delay in announcing a new partner did not help validate the model."Deriving fair value on stock like Ocado with little in the way of short-term cash flow, profit or obvious global peers is more art than science," analyst Andrew Gwynn said.Gwynn said Ocado was taking good steps to ensure barriers to entry and suggested scope for further expansion was probably limited.The analyst said it expected to improve profitability and show it was a credible partner."However, we think the market is now widely anticipating a new partner and we see a risk that either it doesn't come quickly or that it falls short of high expectations," he said.Shares in Ocado were down 2.41% to 453.80p at 1042 BST.