£565m setback for Ocado as broker sounds alarm

A swingeing broker downgrade wiped £565m off the value of booming British tech firm Ocado.

Bank of America Merrill Lynch (BAML) warned Ocado is likely to grow slower in future as it slashed the online supermarket’s rating from ‘buy’ to ‘underperform’.

Ocado has left its many critics with egg on their faces after signing a number of valuable deals with foreign supermarkets, including Us retail giant Kroger, sending its shares rocketing by more than 213pc in the past year.

But BAML has warned investors not to expect the same breakneck growth in the coming years.

it said: ‘Ocado is today entering into the delivery phase and expansion should become less of a catalyst for the coming two or three years. The risk is that the share price takes a pause from here.’

The warning caused the online supermarket’s shares to plummet 7.8pc, or 81p, to 959p.

The FTSE 100 held up better than its european rivals as investors became increasingly skittish about a Us-China trade war and political turmoil in germany. The blue- chip index was down by a wafer-thin 0.03pc, or 2.58 points, at 7631.33, while the FTSE 250 also fell by 0.03pc, or 5.92 points, to 20999.6 points.

Rolls- Royce was one of the FTse 100’s biggest fallers, despite receiving a rating boost from analysts at Credit suisse.

The bank upgraded the engineering titan to ‘neutral’ and jacked up its target price by 150p to 930p after it set out plans last week to save £400m a year, which includes axing 4,600 jobs. shares flopped 2.4pc, or 22.6p, to 927.4p.

Indivior has secured vital breathing space in its bid to block rivals from copying its flagship opioid addiction treatment. in a major boost for the drug maker, the Us district court for new Jersey has ordered rival Dr Reddy’s to temporarily halt plans to launch a generic version of indivior’s suboxone.

nearly £ 1bn was wiped off FTse 250-listed indivior’s share price on Friday after indian drug maker Dr Reddy’s won approval by the Us drug regulator to launch a rival to suboxone in the states.

But indivior has bought itself time after successfully petitioning the court for a temporary restraining order. indivior says it will apply to extend the ban later this month. The announcement caused shares to spike nearly 3pc by midday before pulling back. They ended the day up 1.6pc, or 5.8p, at 366.3p. shares in Primark owner Associated British Foods edged up 1pc, or 26p, to 2762p after analysts said the budget fashion chain was ‘regaining its mojo’.

RBC Capital Markets is predicting a spike in sales at Primark and has therefore upgraded ABF to ‘outperform’. shares in defence firm Cobham rose 4.6pc, or 5.7p, to 130.05p after Us investment bank Morgan stanley upgraded it to ‘overweight’ and hiked its target price by 35p to 150p.

The bank said: ‘Following a challenging period, we see an improved risk reward.’

it was a tough day for Daily Mirror publisher Reach, formerly Trinity Mirror, which announced the departure of finance chief and company secretary Vijay Vaghela after 24 years at the firm.

Vaghela, who is stepping down to pursue other opportunities, has a 12-month notice period and will stay until a replacement is found.

shares in Reach slipped 5.4pc, or 4.1p, to 72.1p.

Miner South 32 snapped up the remaining 83pc of shares in Arizona Mining for £980m. shares hopped 1.1pc, or 2.4p, to 214p.

On AiM, wishbone gold shares fell sharply after it posted another loss. The gold miner made a pretax loss of £689,000 in 2017, down from roughly £723,000 the year before. shares slumped 6.8pc, or 0.02p, to 0.28p.