Ocado Group PLC (LSE:OCDO) shares jumped 13% to 235p after announcing a partnership with Asda to overhaul the supermarket chain's ecommerce infrastructure, marking the first significant UK client win in years for the technology provider.
Broker Peel Hunt said the deal "ticks a lot of boxes" for investors concerned about Ocado's ability to secure new contracts after a prolonged period of negative sentiment.
The partnership represents Ocado's first substantial entry into the UK online grocery market, a sector it has been unable to penetrate significantly because its domestic customer, Ocado.com, already uses its technology.
Asda, the UK's third-largest supermarket by market share with 11.5% of the sector, generated more than £21 billion in sales in 2025 and currently processes over 700,000 ecommerce orders each week across its store and dark store network.
Ocado will deploy its Smart Platform across Asda's entire ecommerce operation from early 2027, including front-end webshop technology, in-store fulfilment systems, and software for last-mile delivery optimisation.
The deal also covers click and collect services and the ability for Asda to fulfil orders placed through third-party aggregators such as Uber Eats, Deliveroo, and Just Eat, opening a potential revenue stream that could be replicated with other retailers.
Peel Hunt highlighted that these modular solutions represent a template that could be offered to larger supermarket chains, particularly citing US grocery giant Kroger as a potential future client.
The partnership is not expected to have a material financial impact on Ocado in the current financial year, though it provides visibility into future revenue streams once deployment begins.
Ocado reiterated its forecast to achieve positive cash flow in the second half of this financial year, with full-year cash flow positivity expected in 2027.
Peel Hunt maintained its 'buy' recommendation on the stock, with a target price of 315p, implying around 34% upside from current levels.
The broker's positive assessment reflects confidence that the Asda deal signals a broader market opportunity for Ocado's platform across UK retail beyond its legacy customer base.