Market report: Ocado takes wooden spoon on fears over profit delivery

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Any investors hoping for the so-called dead-cat bounce from Ocado were left disappointed today as the grocery delivery firm’s shares continued to slide.

The company found itself at the bottom of the FTSE 250 for a second day, down 17.7p, or 6.4%, to 260.3p, as brokers gave it the thumbs-down after yesterday’s trading update, which sent the shares reeling 14%. 

Chief executive Tim Steiner warned price-slashing from the discount supermarkets was eating into margins.

Exane BNP Paribas was largely to blame for Ocado’s prolonged stock-market malaise as the investment bank cut its rating to underperform in anticipation of the company missing annual profit forecasts.

Analysts at the broker even warned there would be little net profit growth over the next three or four years.

The FTSE 100 moved 32.50 points higher to 6698.13, with no major shocks in this morning’s unemployment figures.

Among the blue-chips, UBS became the second broker this week to warn that the rally from HSBC shares has run out of steam.

Analysts at the Swiss broker cut their buy rating on HSBC in favour of a neutral stance and told clients: “We see little in the operating environment and conversations with investors to justify a further re-rating of the stock.”

UBS’s number-crunchers also warned that HSBC is trading at its highest price relative to profit forecasts for six years. The shares shrugged off the gloom and advanced 3.5p to 562.8p.

Johnston Press, 1.5p better off at 16.5p, continued to rally after yesterday’s meeting with Crystal Amber. 

The activist shareholder is said to be pushing for change at the newspapers group, whose shares have plummeted 70% this year.

MartinCo, up 7.5p at 170p, said it was seeing “signs of recovery” after the Brexit blip that caused lettings transactions to stall. The comments came as the AIM-quoted estate agents group, which last week bought EweMove, said first-half revenues rose 12% to  £3.7 million and pre-tax profits leapt 35% to £1.6 million.

Small-cap buyout group Key Capital dumped £3.7 million of shares in AIM-listed music equipment seller Gear4music, causing the shares to tumble 4.5p to 233p. Key retains a 15% stake in the company. The shares were sold at 210p, a tidy premium to the 139p Gear4music floated at in June last year.

Petrol forecourt retailer Applegreen, which floated on AIM two weeks after Gear4music, suffered a similar fate today as B&J Holdings, a vehicle controlled by chief executive Bob Etchingham and chief operating officer Joe Barrett, said it would cash in £23 million of shares in a placing at 383p a pop. The shares retreated 17.5p to 390p.

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September 14, 2016 |
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