Jefferies labels Ocado's newly announced refinancing as a good move, though it has kept its 'hold' rating and 80p target price for the stock.

Online grocer Ocado said on Monday morning it had secured a further 18 months to pay off debts and would raise £35.8m through a placing of shares, equal to nearly 10% of the existing issued share capital.

Meanwhile, the group said that current trading has seen improved sales growth of 13.7% in the six weeks to November 11th, up from 9.9% in the third quarter.

The broker said that the extension of debt facilities and the placing are a "good defensive move" and the news that trading momentum has improved "is also of some comfort". However, a more positive fundamental call on the stock still feels premature.

"These changes are a clear positive for the shares, and a major stock squeeze was inevitable (given the group's 20% of equity being on loan ahead of today). However, over recent months we had been looking for clearer reassurance that an operationally unencumbered Ocado could reaccelerate growth strongly.

"This evidence remains elusive as most peers continue to achieve healthier levels of online growth. In addition, the popularity of click/collect in non-food products suggests that the likely growth of the Drive model could be a major challenge for Ocado in 2013."

BC

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