Ocado left out of pocket amid fears Amazon is invading patch
SHARES in Ocado plunged as investors more than 3,000 miles away exited the stock amid a bearish broker note.
Minutes after the opening bell sounded on Wall Street, the online supermarket, which is heavily traded by hedge funds, fell sharply as US shareholders digested a rating downgrade and unsubstantiated reports that Amazon’s grocery delivery service Fresh may launch in London.
UBS made the cautious move of lowering the stock’s rating from “buy” to “neutral” ahead of a “big new signing”. Ocado is due to agree a deal with an overseas retailer, although no concrete news on the impending signing has been revealed yet. However, the online grocer has made it clear the short-term impact of the new partnership will only be modest. Andrew Gwynn, at UBS, said: “It’s the credibility of the partner that matters and if there’s a global ‘premier league’ food retailer then there’s probably an upside.”
Investors were also spooked by the imminent threat of competition the company may face from Amazon Fresh. However, Amazon has not yet confirmed when the service will be launched. The stock finished 32p, or 6.9pc, lower at 433p.
In the wider market, European bourses drifted lower as the recent Greekdriven relief rally ran its course. The FTSE 100 inched 21.37 points lower to 6,775.08.
Royal Mail took a bruising after a consultation document by market regulator Ofcom revealed why it will review the regulation of the postal service next year. The review comes after Whistl’s exit from the market and Royal Mail’s improved profitability, and, as such, the regulator is concerned that efficiency incentives have lessened and prices may increase due to the lack of competition.
Damian Brewer, at RBC Capital Markets, noted the depth of the review is deeper than had been expected. “We do not think that Royal Mail appears to be over-earning in the view of the regulator - however, the uncertainty of a review, which could take 18 months to conclude, is always unsettling”, Mr Brewer said.
The stock slumped 18.5p, or 3.5pc, to 508.5p.
Housebuilders became FTSE 100 laggards for the second time this week, after Mark Carney, the Governor of the Bank of England, said interest rates could rise as early as the turn of the year, during a major monetary policy speech on Thursday.
Deutsche Bank noted the temporary dip such a statement would have accors the sector. Interestingly, analysts at the bank were somewhat distracted by Singaporean developer Oxley taking a 20pc stake in Galliard Homes. Glynis Johnson, at Deutsche Bank, believes “this deal may bring the topic of M&A back into investors’ horizons”. Barratt Developments fell 1.3pc to
635.5p, Taylor Wimpey slid 1.2pc to 188.7p and
Persimmon dropped 1.4pc to £19.78. Mid-cap stocks
Bovis Homes and Bellway were also hit, falling 2.6pc and 1.8pc, respectively.
Elsewhere, as prices of key metals fell, so too did mining stocks, as worries about demand from China, the world’s biggest consumer of metals, mounted. Anglo American was down 12.9p to 877.4p,
Antofagasta was 7.5p off at 651p and Rio Tinto closed 29.5p down at £25.93.
Finally, online gambling company 888 Holdings benefited after clinching a deal to buy rival Bwin.
party. 888 was changing hands at 173.8p by the close, up 8.6pc, while Bwin advanced 1.1pc to 104p.