The Ocado share price declined yesterday ahead of key earnings by rivals like Tesco and as the UK economy started its reopening. The OCDO stock ended the day at 2,100p, which was slightly below the Friday’s high of 2,155p. The company is valued at more than £15.74 billion.
What happened: Ocado has had a bad year. The stock rose to a high of 2,888p early this year and then erased those gains by dropping by more than 27%. This performance has been mostly because of the ongoing happenings in its key markets like the UK.
The stock rose early this year as the number of coronavirus cases kept rising and the UK government added new lockdowns. As such, investors expected that this would lead more people shopping online, a positive thing for Ocado.
However, in the past few months, the UK government has ramped up vaccination. It has already inoculated more than 30 million customers. And this week, the government started to allow some business locations to reopen.
Therefore, the question is whether more people will continue buying in Ocado after the country reopens. Some analysts believe that the pandemic has created long-lasting habits that will see more people keep buying online. On the other hand, some believe that the volume of online sales will start levelling soon.
In general, the average estimate of Ocado share price is 2,153p, which is slightly above the current price. Analysts at Citi, Numis, Berenberg, and Bank of America have a buy rating on the stock. On the other hand, those at Credit Suisse are underweight the stock.
On the daily chart, we see that the Ocado share price has moved sideways recently. It has remained in a range between 1,967p and 2,153p. A closer look shows that this range resembles a bearish flag pattern. It is also along the 25-day and 15-day exponential moving averages.
Therefore, in my view, the outlook for the stock at the current time is bearish. There is a possibility that it will drop to the lower side of the channel at 1,967. This is a 7% decline from the current price. However, any move above 2,200p will signal that bulls have returned and invalidate the bearish thesis.
