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Ocado boosted by trading and Goldman upgrade

Published: 11:20 10 May 2013 BST

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Shares in online grocery delivery group Ocado (LON:OCDO) roared higher after Goldman Sachs doubled its target price and the company issued a reassuring trading update.

Goldman upped its target to 300p from 146p and its investment stance to ‘buy’, saying the business had an inherent advantage relative to traditional peers.

“We expect the company to accelerate revenue growth through 2013 and achieve 20% growth in 2017 as capacity constraints have now eased.

“Longer term, we believe that the business can achieve 8% UK market share, although not until 2030 on our estimates.

“Furthermore, we believe that Ocado could pivot strategically and provide technology licences to assist the channel’s growth in Europe.”

The US broker’s comments chimed with a reassuring AGM statement from the group today.

Sales had continued to grow, it said, both from increasing loyalty and spend from existing customers and new shoppers supported by expansion generally of the online grocery shopping market.

Operations commenced in February at Ocado's second Customer Fulfilment Centre at Dordon, Warwickshire, a development that it said will fuel its growth going forward.

Ocado added that talks are still ongoing with Wm Morrison over an online shopping arm for the supermarket chain in the UK. Any such agreement would be complementary to Ocado's existing partnership with Waitrose, it said.

“The board is encouraged by the progress of the business so far this year, and believes the company is well placed to exploit the fast growth in online grocery retailing," the AGM statement concluded.

Shares jumped 24p to 233p.

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