Ocado Group PLC (LSE:OCDO) topped the FTSE 100 fallers on Monday, down 4.6%, after Barclays downgraded the stock to 'underperform' from 'equal weight'.
It also slashed its price target to 430p from 680p.
The broker said it follows a deep-dive into Tech Solutions, which is around 80% of its enterprise value, based on expert conversation and differentiated customer fulfilment centre (CFC) contract modelling, which points to Ocado missing medium-term guidance.
Barclays sees more downside risk in the next 12 months.
While it does not dispute Ocado's grocery technology is market leading, it thinks Ocado's medium-term guidance is at risk from existing customer CFC/module roll-out delays.
It also highlighted competitive pressures from Autostore while it is sceptical how much the company can scale non-grocery deals.
At the same time, Ocado's impending debt maturity wall means that its operating trends in the next 12 months will have an amplified effect on valuation, while the current Amazon/Autostore trial in the US presents a significant negative tail-risk that is not well understood, Barclays said.