Broker backs Ocado in robot wars with Amazon
Warren Buffett said he was an ‘idiot’ for not buying shares in amazon earlier than he did after it was revealed his investment firm had finally taken a stake in the online retailer.
Well, perhaps the Sage of Omaha should look more closely at Ocado if he doesn’t want to miss the boat again. Because, according to a detailed piece of City research, the online grocer’s warehouse technology beats amazon’s.
It’s unlikely Buffett or his Berkshire Hathaway team are on the mailing list of London house Peel Hunt. nevertheless, its insights on the relative merits of Ocado’s versus amazon’s set- ups are worth a read.
Having recently visited amazon’s ninth-generation warehouse in essex, analysts James Lockyer and Damindu Jayaweera were underwhelmed. The utilisation rates were lower than Ocado’s, there were miles of conveyor belts and the robots travelled at no more than walking pace.
Ocado’s automated pickers, developed with the help of a firm in northumberland, Tharsus, are not only swift, but so sophisticated they are able to choose certain fruit on the basis of ripeness. Ocado is even investing in dexterous robotic arms.
While it started as an online grocer, these days Ocado is a tech firm that has deals with the likes of Kroger, one of america’s largest retailers, and Casino of France.
It is helping them set up the infrastructure which is required to create huge picking and distribution centres. The valuation, currently north of £9.6bn, reflects the worth of the tech.
The stock closed at 1380.5p, up 2.6pc, or 35p. Peel Hunt thinks it has some way further to go, and has a price target of 1700p. The
FTSE 100 ended the day up 29.33 points at 7380.54, having unwound some of the losses incurred earlier in the week.
Benefiting from follow-through buying after quarterly numbers earlier in the week were Smith &
Nephew, which climbed 3.3pc, or 50p, at 1569p, and Rolls-Royce – up 1.4pc, or 12.8p – at 934.2p.
Anglo American (up 2.3pc, or 45.2p, at 1980.8p) and Antofagasta (ahead 0.9pc, or 8.2p, at 878.8p) led the mining sector revival after a copper and China-inspired selloff earlier in the week. anglo also benefited from an upgrade from the London arm of the influential Swiss house Credit Suisse.
Astrazeneca was in demand after it received the regulatory green light in the US for a once-aday pill for type-2 diabetes and rose 0.9pc, or 53p, to 5741p. Intercontinental Hotels Group fell 1.1pc, or 54p, to 4944p after occupancy levels in the early part of the year had dipped a little. Falling demand in the americas cut into the sales of colostomy bag maker Convatec in its first quarter, it said.
Despite the decline, the group was able to meet its expectations for the period, sending shares up 5.1pc, or 6.9p, to 143.45p. Sustainable energy investor Leaf
Clean Energy rocketed 172.7pc, or 57p, to 90p after a favourable court ruling regarding damages claimed from a dispute with US based power firm Invenergy.
Mining group Rambler was another hefty riser after a record level of ore for the second year running through its facility in newfoundland, Canada.
The company’s shares were up 25pc, or 0.35p, at 1.75p.
Redx Pharma, down 12.5pc, or 0.75p at 5.25p, was all at sea after it said it was considering a convertible bond issue to strengthen the balance sheet.
Finally, Faron Pharma, which had to issue a statement saying it didn’t know why its shares were falling, saw its stock fall a further 17.1pc, or 14.5p, to 70.5p.