Ocado Share Price to Drop Further On Credit Suisse Downgrade

The Ocado share price is trading higher this Friday but still looks set to end the week lower as the stock continues to face headwinds from an inflation-driven drop in retail sales. The online delivery service has also seen its price target cut by investment Credit Suisse, adding a new layer of headwinds. 

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FTSE100

FTSE100 (6825.1)

In Profit

STOP

SELL

TP1

6840

TP2

6750

The week’s drop was set off by a sales warning, despite the company reporting higher revenue for the third quarter of 2022. Inflationary pressures tend to cause a change in shopping habits, and Ocado Group expects this to factor into its full-year sales numbers. 

Analysts at Credit Suisse have cut the Ocado share price target radically. In making the 39% price downgrade from 960p to 590p, the investment bank says that Ocado is yet to see the benefits of its advanced technologies on its retail joint venture results. Credit Suisse opines that the company has exhausted large market potential opportunities in most major developed markets. Higher retail costs and a slowdown in its online food delivery business is also seen as a risk to existing partnerships.

The Ocado share price is down 13.05% this week with just a few hours to the end of trading.

Ocado Share Price Forecast

The breakdown of the 691.8 support puts the stock into a bearish structure. The intraday uptick continues to chase 691.8 (12 May low)in a return move, intending to make this point its immediate target to the north. Only a break of this area clears the route toward 779.8 (22 June low/26 August high). Above this level, additional barriers present themselves at 886.2 (4 May low and 1 August high) and 939.4 (30 May high). The 25 April low at 997.0 and the 1074.0 price marks form additional price targets to the north, which only become viable if there is a tremendous advance.

On the flip side, the failure of upside momentum at present levels puts the 604.6 support under pressure. If this pivot collapses under bearish pressure, the route toward the 500.0 psychological support (17 April 2018 low) becomes clear. The 23 January 2018 low at 441.0 becomes the new downside target if price deterioration continues, followed by 383.4 (4 December 2015 low).

Ocado: Daily Chart