After its recent relegation from the FTSE 100 to the 250, Ocado Group PLC (LSE:OCDO) has started the day as the index's biggest faller dropping more than 4%.
It comes after Morgan Stanley (NYSE:MS) downgraded the retail stock, cutting its price target from 345p to 215p or around 30% below its current market value.
Morgan Stanley (NYSE:MS) said the downgrade was based on Sobeys, the Canadian supermarket chain, axing its partnership with the firm, leading to the broker fearing it could erode the development and launch of other projects.
Kathleen Brooks at XTB said: "This is a damning verdict, as it plants the seed of doubt that Ocado’s top team can deliver on its strategic plan, which is why the stock is selling off so sharply.
"The stock price is down 14% in the past 5 days and is lower by 12% in the past month. Year to date, Ocado shares have lost more than 60% and it is the worst performer on the FTSE 250 in that time.
"A recovery in this stock is a big task since sentiment is firmly rooted to the downside as Tuesday’s analyst downgrade shows."