Ocado share price is down by more than 5% today, becoming the worst-performing FTSE 100 component. It is trading at 2,247p, meaning that it has dropped by more than 24% from its year-to-date high of 2,910, where it reached in September. In the same period, many FTSE components have been on an upward trend.
What happened: Ocado (OCDO) shares are falling even after the company upgraded its forward guidance and doubled its profit. It expects its online sales – through Marks & Spencer – to double as more people shop at home. In the past 13 weeks, these sales have jumped by 35% to £530 million as the UK moved to a lockdown.
Why is Ocado share price falling? The divergence between Ocado’s strong guidance and share price is two-fold. First, the firm expects its costs to increase. That’s because it has hired more people to boost its delivery business. Second, because of the Covid vaccine, many analysts believe that Ocado’s growth will start to flatten in 2021.
Is Ocado a good investment? Generally, analysts have a mixed feeling about Ocado shares. For example, JP Morgan analysts believe it is worth about 1,650p. Others at Berenberg and Citi believe it can move up to 2,530p and 2,900p.
OCDO share price technical outlook: Turning to the daily chart, we see that Ocado shares have been making lower highs recently. They have formed a descending channel that is shown in pink. Also, they are struggling to move below the 38.2% Fibonacci retracement level.
They have also completed the impulse Elliot wave and are currently in the correction wave. Therefore, in the near term, the shares will possibly remain at the current level and then bounce back in 2021.
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