Ocado now bigger than Sainsbury as shares soar

OcadO shares surged after it received ringing endorsements from two brokers – meaning it’s worth more than Sainsbury’s.

In a double upgrade, Bernstein hiked the online supermarket’s target price by 1055p to 1300p and raised it to ‘outperform’.

Separately, Goldman Sachs bumped up the tech firm’s rating to ‘buy’ following its blockbuster deal with US grocery giant Kroger.

It marks a remarkable turnaround for Ocado, which will join the FTSE 100 for the first time later this month, following years of doubt among analysts over its potential. However, in the past year, its shares have shot up 311pc, meaning it is valued at nearly £7.8bn. Last night Sainsbury’s was worth £6.7bn with Tesco still the biggest grocer at £24.4bn.

Ocado’s shares jumped 11.2pc, or 111.6p, to 1111p yesterday on the back of its rating upgrades.

Meanwhile, sources say Ocado has ordered £4.3m-worth of robot power units that can withstand cold temperatures for use in its warehouses. The units will be supplied by AIM-listed electronics manufacturer Solid State, which confirmed the order but would not say whether it was placed by Ocado. Gary Marsh, chief executive at Solid State, said: ‘This contract establishes Solid State as a leading innovator in the fastevolving distribution and fulfilment technology market.’

Solid State shares jumped 6.8pc, or 20p, to 312p.

The FTSE 100 marched 0.73pc, or 56.36 points, higher to 7737.43 as the pound slipped against both the dollar and the euro.

The FTSE 100 typically does well when sterling weakens as many of the firms on the index make big chunks of their earnings overseas and are therefore boosted when converted back. The FTSE 250 also put in a strong performance, up 0.75pc, or 158.23 points, to 21318.77. Shares in Russian steel giant

Evraz boomed after Fitch boosted the firm’s default rating to ‘ BB’ from ‘ BB –’. Fitch said: ‘ Today’s upgrade reflects Evraz’s successful reduction of net debt to $4bn.’

Its pushed Evraz shares up 7.5pc, or 37.6p, to 537 and to the top of the blue-chip index.

Analysts at Liberum boosted ITV’s target price by 10p to 275p, arguing there is a ‘huge opportunity for ITV in the online video on demand space’. ITV has less than a 6pc share of the on- demand market, but Liberum says it is in a ‘prime position’ to growth this.

The broker added: ‘If ITV can capture a greater share of the online video on demand market, there could be a circa 20pc upside in our longer-term forecasts’.

ITV shares ticked up 1.7pc, or 2.85p, to 172p. Deutsche Bank downgraded Rio Tinto from ‘buy’ to ‘hold’, forecasting more muted demand for iron ore, particularly from China. The bank said: ‘ We expect Chinese iron ore import demand to peak around 2020, limiting growth potential from the majors.’

Rio Tinto shares edged down 0.02pc, or 1p, to 4419p.

The German investment bank also hit credit reference agency

Experian with a downgrade to ‘hold’. It said: ‘ Experian is now pricing in ongoing high single digit growth, however we expect the company will see slower growth in [the second half of the year].’

Despite the downgrade, Deutsche increased Experian’s target price by 50p to 1800p. Shares closed 0.6pc, or 12p, lower at 1871p.

HSBC also wanted in on the rating change flurry, upgrading rat catcher Rentokil from ‘hold’ to ‘buy’ and raising its target price a whopping 150p to 440p.

HSBC added: ‘Rentokil continues to invest its cash flows to acquire pest businesses and is transforming into a pure pest control company.’

Shares nudged up 1.1pc, or 3.7p, to 352.2p.