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(Sharecast News) - JPMorgan reiterated its 'overweight' rating on Ocado on Wednesday and lifted the price target to 290p from 245p as it continues to view the risk/reward as "highly attractive".
The bank noted that Ocado shares remain volatile, down 7% year-to-date versus the FTSE 100 up 9%, given the stock's "asymmetric, event-driven profile".
JPM said share price movements continue to be driven by the binary nature of the investment case, which hinges on (1) incremental deal announcements across both customer fulfilment centres and SBA (store-based automation) solutions that validate the proposition and (2) delivery of positive underlying cash flow by year-end.
The bank said recent news flow around the signing of a large, new CFC customer, alongside a more constructive tone from chief executive Tim Steiner on its recent investor call, reinforces JPM's view that momentum is improving and that further deal wins are achievable.
"At current levels, we see the valuation as depressed: the share price does not, in our view, even reflect the value of contracts already signed and, on our estimates, implies further site closures rather than incremental openings," it said.
The bank also said it remains positive around Ocado's ability to outbid competitors when it comes to new deals.
At 0910 BST, Ocado shares were up 3.8% at 229p.
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