UBS cuts Ocado target by a third as growth path stays clouded

What Brokers Say Retail & Consumer Written by: Ian Lyall 14:02 Thu 06 Aug 2026 --> Disclaimer No investment advice About this content Editorial Standards & Policies Share article About this content × About Ian Lyall Ian Lyall, a seasoned journalist and editor, brings over three decades of experience to his role as Managing Editor at Proactive. Overseeing Proactive's editorial and broadcast operations across six offices on three continents, Ian is responsible for quality control, editorial policy, and content production. He directs the creation of 50,000 pieces of real-time news, feature articles, and filmed interviews annually. Prior to Proactive, Ian helped lead the business output at the Daily... Read more About the publisher Proactive financial news and online broadcast teams provide fast, accessible, informative and actionable business and finance news content to a global investment audience. All our content is produced independently by our experienced and qualified teams of news journalists. Proactive news team spans the world’s key finance and investing hubs with bureaus and studios in London, New York, Toronto, Vancouver, Sydney and Perth. We are experts in medium and small-cap markets, we also keep our community up to date with blue-chip companies, commodities and broader investment stories. This is content that excites and engages motivated private investors. The team delivers news and unique insights across the market including but not confined to: biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto and emerging digital and EV technologies. Use of technology Proactive has always been a forward looking and enthusiastic technology adopter. Our human content creators are equipped with many decades of valuable expertise and experience. The team also has access to and use technologies to assist and enhance workflows. Proactive will on occasion use automation and software tools, including generative AI. Nevertheless, all content published by Proactive is edited and authored by humans, in line with best practice in regard to content production and search engine optimisation. Ocado Group PLC ( LSE:OCDO ) View Price & Profile UBS cuts Ocado target by a third as growth path stays clouded Published: 14:02 06 Aug 2026 BST UBS has cut its price target on Ocado Group PLC (LSE:OCDO) to 230p from 340p, a 34% reduction that reflects less confidence in the timing and scale of new contract wins rather than any change to its neutral rating. The shares closed at 212p on Wednesday, leaving barely 9% of implied upside. Analysts Sreedhar Mahamkali and Angelo Mangieri framed the problem in the note's title: better visibility on cash than growth. On cash, they are largely reassured. Ocado expects to turn cash flow positive towards the end of the second half, with a £200 million outflow for the full year and positive cash flow in 2027. UBS believes management is focused on delivering the £150 million of planned cost savings and cutting technology spend, and has aligned its own forecasts with that guidance. On growth, the picture is murkier, and the headline numbers flatter it. The Kroger and Sobeys warehouse closures generated £353 million of one-off revenue and a £351 million benefit to adjusted earnings in the first half, lifting reported group adjusted earnings to £432 million against £81 million excluding the settlements. Those payments also remove recurring fee income, roughly $50 million from Kroger and £7 million from Sobeys. Strip out the one-offs and UBS has cut its technology solutions revenue forecast by 13% for this year and 6% for the two years after, with earnings estimates down 15% and 11%. Average live modules have fallen to 115 from 122 a year earlier, and technology solutions margins slipped to 23.3% in the first half from 26.3%. UK logistics was the bright spot, with revenue forecasts nudged up 3% on the strength of the retail joint venture and cost recovery. The valuation change goes beyond the forecast cuts. UBS lowered its terminal growth assumption to 1% from 2% and raised its equity risk premium to 8%, taking the weighted average cost of capital to 9.4% from 8.5%. That alone accounts for much of the target price reduction, with the technology solutions arm now valued at £1.49 billion against £2.77 billion previously. The strategic hope is store-based automation, which Ocado pitched heavily on the results call as an answer to capacity constraints in American online grocery. The company says it has more than 10 active discussions. UBS calls the economics attractive but the proposition pre-commercial, and wants evidence of a successful deployment before crediting it. Continue reading