Ocado shares rally despite expectations of revenue fall

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Ocado half year loss

Ocado has seen its share prices skyrocket thanks to recent tie-ups, despite expectations it will reveal a drop in earnings next week.

Analysts have predicted that the online grocer will report sales growth of 11.7 per cent for its first quarter on Tuesday, down from 11.6 per cent three months prior, while half year earnings are expected to drop from £45 million to £43.5 million.

Its slight slip in sales is expected thanks to disruption caused by the earlier this year, but this has not dented traders’ confidence in the retailer.

After entering the FTSE 100 for the first time last month, its share prices have rallied, rising over 260 per cent in the last 12 months.

This has been driven by numerous deals aiming to develop customer fulfillment centres across Europe, alongside a recent landmark deal with US firm Kroger.

Other deals include tie-ups with Canada’s Sobeys and French supermarket chain Groupe Casino, seeing Ocado provide them with its Ocado Smart Platform system, which shautomates picking and packing orders.

“The shares have had an outstanding run – up 261% over 12 months – reflecting recognition of the value in Ocado’s solutions division, the earnings runway afforded by the recently signed deals, and the validation of Ocado’s platform operation,” Numis Securities analyst Andrew Wade said.

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