Will the Ocado share price keep delivering ahead of its H1 earnings?

Ocado has seen its share price soar in recent months, with investors eagerly awaiting its half-year results on Tuesday 14 July to get an update on its performance and what it has in store in the second half 2020.

Ocado has seen its share price soar in recent months and is well-positioned to see its gains continue, with growing interest in its tech platform from global retailers and its new joint venture with Marks & Spencer (M&S).

And with its half-year results on Tuesday 14 July, investors are eager for an update on the company’s performance and an outlook on what its ambitions are for the second half of 2020.

The growth potential of its tech platform has helped the company exceed nearly all analysts’ expectations, with the stock up over 1000% since its initial IPO price of 159p per share back in 2010.

Ocado is trading at £20.04 per share at the time of publication.

The online grocery delivery platform will unveil its half-year results on Tuesday 14 July.

From September 2020, Ocado will end its 20-year partnership with Waitrose and enter a new relationship with M&S, after the retailer acquired half of its grocery business in a deal valued at around £750 million.

Covid-19 has made online demand for groceries skyrocket, with the new joint venture with M&S capable of reaping major rewards for both parties if executed correctly and able pushing Ocado’s stock higher in the fourth quarter of 2020 to become one of the UK’s top tech stocks.

Licensing could be key to Ocado's ongoing growth

Outside of Ocado’s joint venture deal with M&S and, arguably the key driver of its share price gains in 2020, is its digital grocery platform which it licenses several leading supermarkets from around the world, assisting them with their online sales, storage and distribution. This includes Morrison in the UK, Groupe Casino in France, ICA Gruppen AB in Sweden, Coles Group Limited in Australia, Kroger Co in the US, Sobeys in Canada and Aeon in Japan.

Although it is still early days for Ocado’s tech business. The company still generates three times more revenue from its online grocery operation than its tech division, and it’s still loss-making overall.

Despite this, Ocado is becoming a vital partner for major retailers looking to automate and digitise their businesses and has plenty of room to grow considering its tech can be used by more industries than just groceries.

As a consequence, Ocado continues to outperform its peers and broader market, with the stock up 59% year-to-date compared with FTSE 100 which is down 19% over the same period.

FTSE 100 rebounds from recent weakness

The FTSE 100 has been one of the weaker performers of late, having failed to hold on to the gains from late May and early June, according to Chris Beauchamp, chief market analyst at IG.

‘Early gains this morning have seen it rebound from the lows of Friday’s session, but the price will need to clear 6300 to the upside to suggest a bullish breakout is in play,’ he added.

‘A turn lower, below 6250, would likely signal that a downward move is back in play, targeting 6000 and lower.’

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