JP Morgan has reiterated its overweight rating on Ocado and raised its price target to 460p from 290p, arguing the online grocery technology group still offers around 50% upside even on conservative assumptions.
Analyst Marcus Diebel said operational momentum continues to build in what he describes as a sustained turnaround, with several near-term catalysts likely to drive a re-rating.
The most immediate of those is a Kroger capital markets day today, followed by a Marks & Spencer equivalent on 10 November, both expected to reinforce an accelerating strategic shift toward online grocery.
JP Morgan projects a group EBITDA compound annual growth rate of 21% for 2025 to 2028, supported by five new customer fulfilment centre ramp-ups scheduled between 2027 and 2029.
Diebel said the pipeline is largely de-risked, providing visibility into Technology Solutions revenue growth, and that management remains highly confident of achieving underlying free cash flow break-even by the second half of 2026, a milestone the market has been watching closely.
Ocado Retail, the joint venture with Marks & Spencer, has emerged as the fastest-growing UK grocer, posting 15% revenue growth in the first half alongside margin expansion and further capacity additions.
JP Morgan has made modest model updates incorporating incremental cost savings, lifting its 2027 and 2028 EBITDA estimates by 1% and 2% respectively.
More significantly, the broker has removed the assumption of further site closures from its price target model, having previously assumed 33 as a conservative buffer.
The 460 pence target still ascribes value only to what Ocado has already contracted and assumes just one incremental module addition, which Diebel describes as conservative given the potential for further signings from both existing partners and new customers.
The broker also argues that current in-store picking solutions are becoming increasingly sub-optimal at scale, both operationally and economically, making the industry more receptive to automated fulfilment.
Ocado's balance sheet has been stabilised, with no material refinancing requirements over the next three years.
