MARKET REPORT: Traders upbeat on Ocado after robot wars victory

Ocado shot up the FTSE 100 index as the City remained upbeat over its prospects.

Ahead of the blue-chip online supermarket’s quarterly results today, Jefferies raised its target price on the stock to 750p from 550p. 

The US investment bank said its upgrade reflected Ocado’s £200million settlement in July with the Norwegian robotics firm Autostore, which will pay the sum over the next two years after a three-year legal battle.

The dispute began in October 2020 when Autostore said it was suing Ocado for infringing tech patents relating to the robots it uses in its warehouses to pick and pack grocery orders. 

JP Morgan also raised its medium-term profit margin forecasts from 7 per cent to 8 per cent for Ocado’s retail unit. Shares rose 3.1 per cent, or 23.4p, to 787p.

The FTSE 100 fell 0.8 per cent, or 58.44 points, to 7652.94 and the FTSE 250 slid 1.8 per cent, or 340.5 points, to 18449.27.

Oil prices were up a touch with a barrel of Brent crude close to $95. 

James McCormack, a research director at the investment firm Cavendish, said that analyst predictions of $100 a barrel are becoming ‘less rare’ given crude has jumped more than 30 per cent since mid-June.

But he added there are signs that the rally is ‘overdone’.

Marks & Spencer rose 1.3 per cent, or 2.8p, to 222.5p as the High Street stalwart made a steady start on its return to the FTSE 100 index following a four-year hiatus.

There was also some much-needed respite for International Distributions Services (IDS) after JP Morgan said it believes its Royal Mail arm is at a turning point in terms of revenue and costs. 

Stock Watch – Dialight

Dialight slumped 18.8 per cent, or 44p, to 190p after it warned its full-year results would be worse than feared.

Orders at the LED lighting firm fell 12 per cent in the first six months of 2023, while revenue was down 13 per cent to £73.2million.

It also swung to a loss of £4.2million, having made a £1.6million profit a year earlier.

But it remained hopeful of an improved second half with the start of its transformation plan aimed at simplifying the group. 

It also plans to tap shareholders for fresh funds.

The US investment bank also said IDS could revisit the idea of splitting up Royal Mail and GLS once the UK business becomes profitable again.

It increased its rating on the stock to ‘overweight’ from ‘neutral’ and raised its target price to 310p from 300p. And shares added 1.9 per cent, or 5p, to 262.3p.

Mike Ashley’s fashion empire was back in the spotlight after reports emerged over the weekend that it was in advanced talks to sell the online clothing label Missguided to Asian fast fashion giant Shein. 

Shares in Frasers Group, which owns Sports Direct, Jack Wills and Flannels, fell 0.9 per cent, or 7p, to 797.5p.

Phoenix, the savings and retirement business, said it was on course to deliver positive group net fund flows from 2024 for the first time in its history.

The insurer reported a 72 per cent increase in new business net fund flows to £3.1billion in the six months to June. Shares, however, lost 2.2 per cent, or 11.6p, to 526.4p.

Graphene producer Directa Plus will start working with the American strategic advisory and government relations firm Spectrum to explore opportunities to sell its technologies to the US defence sector. Shares gained 7.5 per cent, or 3.5p, to 50p.

News from GSK that US regulators have approved the use of its drug Ojjaara to treat patients that suffer from myelofibrosis, a blood cancer, and anaemia failed to excite investors. Shares dipped 0.3 per cent, or 4.2p, to 1505.4p.

Fellow pharma group Futura Medical sank 4.2 per cent, or 2.2p, to 50p after it warned it was two years away from making a profit. 

The group narrowed its losses to £1.76million in the first half of 2023 – down from £2.46million the year before.

Tan Delta Systems, which made its stock market debut last month, was hopeful the two-month pilot agreement it signed with L&T Technology Services of India could lead to a ‘substantial’ roll-out of its sensors that analyse the quality of oil in engines and generators used in ships, trains and trucks.

Shares surged 6.1 per cent, or 1.5p, to 26p yesterday.