Ocado Came Out Tops In Previous Lockdown: Should You Buy It As 2nd Lockdown Looms?
The Times is reporting that UK policymakers may be considering a ban on social gatherings as cases of the coronavirus escalate locally. What will in effect be a new lockdown would entail the closure of bars, pubs, restaurants and any indoor meetings that fell under the previous prohibition.
London Mayor Sadiq Khan has been quoted by the Times as saying there was a need for” immediate action to get the virus back under control.” Hospital admissions and emergency calls from probable cases have all increased recently, prompting warnings in several quarters of a looming 2nd epidemic in the UK.
UK banks have been instructed by the BoE to tighten remote work controls on its staff, after directing banks only to allow staff whose presence at office locations was of critical importance back to their office stations.
Potentials for Ocado Share Price
Ocado was one of the companies that benefited significantly from the previous lockdown. As shoppers were forced to stay indoors, Ocado’s deliveries soared as online orders for groceries went through the roof. The recent successes seen with its partnership with Marks & Spencer suggests that a renewed lockdown will be perfect for business.
But what are the implications for Ocado share price? Should you buy into the stock?
At 2841, this stock is too expensive for many retail investors. The stock price has nearly tripled since March 2020. Despite soaring revenues that are expected to target £2.3bn at the end of the 2020 fiscal year, the company’s last earnings reports show a net loss of £41m. A second lockdown could change the things substantially and may help this company erase losses from its books in a year.
Ocado may need to undergo a selloff to cheaper levels to bring in new demand into the stock. Price action on the daily chart is consolidating within a flag pattern follow the steep rise in the previous week. A correction would not be out of place at this time. 2582, 2440 and 2247 are possible correction targets, with 2180, 2078 and 1995 also lining up as potential targets if prices break down the strong support at 2247.
Prices may even push higher from present levels without a correction if the 2nd lockdown provides a significant boost in business for Ocado. A resolution of the evolving bullish flag could see a price projection of 3000 or even 3200 in the weeks or months ahead. The pattern is negated if a correction takes place.