Rocky ride looks set to continue for Ocado

It's been a rocky ride for investors in Ocado and the latest noise from the City suggests that's likely to continue.

Floated at 180p a year ago, the online supermarket has seen the stock yo-yo up to as high as 290p and to as low 120p. Today they were at 132p, which values the business at £690 million.

Yesterday Goldman Sachs, which led the flotation, downgraded its forecasts for the company by 40% for this year, 40% for 2012 and 50% for 2013.

Today Panmure Gordon's retail expert Philip Drogan issued a stinging note to his clients about the company's prospects.

He writes: "Forecasts have tumbled fast and are continuing to fall, both for the current year and for future years and yet we have had no statement from the company, which we find a little puzzling....we struggle to come up with a valuation which justifies the current share price and continue to see substantial downside."

Waitrose and others are competing in Ocado's space with gusto. Ocado has always argued that such competition shows how large the potential market is and that it will become a hugely profitable concern.

Adds Drogan: "John Lewis sold its remaining stake in Ocado in February for 265p.......John Lewis's timing now looks outstanding (as it always did)."
Marks & Spencer is likely to launch online, says the analyst, and Morrison has already flagged its intention to do so.

Ocado had no comment.