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On Thursday, Deutsche Bank (ETR:DBKGn) analysts adjusted their outlook on Ocado Group PLC (LON:OCDO:LN) (OTC: OCDGF), slashing the price target from GBP6.60 to GBP3.70. Despite the significant reduction, the firm maintains a Buy rating on the stock. The revised price target is influenced by new adjusted EBITDA projections for the fiscal year 2025.
The bank’s analyst cited updated guidance from the company, which anticipates a revenue increase of more than 10% in its Technology Solutions division and an EBITDA margin between 20-25%. Additionally, Ocado’s Retail Logistics (ORL) is expected to grow over 10%, with margins around 4.4% before accounting for GBP33 million in Hatfield fees. The Logistics segment is projected to maintain a stable adjusted EBITDA of approximately GBP30 million.
Although the new forecast is around 5% lower than previous estimates, Deutsche Bank notes that Ocado’s underlying free cash flow is expected to improve by nearly GBP100 million. This improvement is attributed to a decrease in capital expenditures and technology/support costs. The analyst’s forecast also includes provisions for increased interest expenses that may arise from the potential refinancing of the company’s debt, specifically its December 2025 debenture of GBP167 million and October 2026 senior unsecured notes of GBP224 million.
Ocado Group PLC, known for its online grocery platform and automated warehouse technology, continues to draw investor interest with its innovative solutions in a competitive market. Despite the lowered price target, the Buy rating suggests that Deutsche Bank remains positive on Ocado’s long-term potential.
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