Ocado Group PLC (LSE:OCDO) has been included on JP Morgan’s Positive Catalyst Watch ahead of the digital grocer's results, due on 26 February, with the American bank anticipating improving trading conditions.
Analyst Marcus Diebel said share price volatility in 2025 has been pronounced but he sees “several drivers for operational stability”.
First, JP Morgan expects more clarity on Kroger after the partners confirmed they will continue with six sites. The broker points to a stronger balance sheet after Ocado repaid its 2025/2026 maturities and received a £260 million (£350 million dollars) termination fee from Kroger this month.
Diebel expects management to focus on cost optimisation and margin expansion.
JP Morgan forecasts EBITDA margins in the Core Tech Solutions business rising to 40% by 2027 from 25% in 2025. It expects better cash conversion, with management indicating it aims to be free cash flow breakeven for the year by 2027.
The bank adds that ending exclusivity in most markets improves optionality, particularly in the US. Its November 2027 price target remains 290p.
JP Morgan said that the target implies a reduction of a further 37 modules beyond Kroger’s announced closures, which it views as unlikely.