Ocado finds a City friend in UBS over international expansion

Analyst Andrew Gwynn raised his recommendation from neutral to buy

(PA)

Investors started the stopwatch in July for grocery delivery firm Ocado to find an international partner. Four months later, the clock is still ticking, Amazon Fresh is rumoured to be edging closer to launching in the UK, and Ocado’s stock is 25 per cent cheaper.

However, the company, which so far only delivers food for Morrisons in the UK, has found a City friend in the form of UBS, which backed it to strike a deal to drive its overseas expansion.

Analyst Andrew Gwynn raised his recommendation from neutral to buy, helping the shares up 3.9p to 355.7p, and he argues that it will be tougher than people think for Amazon Fresh to replicate the Ocado model if or when it hits these shores.

“It will also take time to build the buying scale needed to disrupt industry pricing, albeit, Amazon Fresh could in time get there,” Mr Gwynn added.

The FTSE 100’s five-day winning streak came to an end as it drifted 29.14 points down to 6,305.49.

Miners were the main culprits as commodity prices, especially nickel and copper, plummeted, sending BHP Billiton down 14.2p to 871.3p and Glencore 1.91p lower, to 90.42p.

Fears mounted over retailers’ ability to cope with demand on Black Friday this week, dragging Tesco down 6.35p or 3.7 per cent to 165.1p and rival supermarket group Morrisons down 4.1p to 152.3p

Reports of job cuts in the United Arab Emirates nudged HSBC up 3.8p to 534.9p, while defence shares, including BAE Systems up 5p at 497p, picked up as the UK’s defence budget was fortified by an extra £12bn.

Rumours that private equity firms are sniffing around Home Retail Group breathed life into the Argos owner’s sinking share price, which rallied 7p to 110.4p.

IT consulting firm Kainos slumped 51.25p or 18 per cent to 228.5p, after broker Investec downgraded it from buy to hold on the back of the share price doubling since it floated in July. Its maiden half-year results showed a 29 per cent rise in revenues to £37.2m; however £1.4m in flotation fees dragged pre-tax profits down to £5.2m.