Ocado Group (LON: OCDO) shares rose over 1% Tuesday, but Goldman Sachs analyst Richard Edwards (and us) are cautious on the stock.

The analyst started Ocado at Neutral with a 600p per share price target, telling investors in a note that his firm estimates the online grocery technology company and retailer will continue to be free cash flow negative until 2030 and will, as a result, need to refinance £1.45 billion worth of bonds due 2025 to 2027.

However, Edwards added that the uncertainty over the feasibility and cost of further bond issues leads Goldman Sachs to be “more cautious on the share price outlook.”

Ocado shares are down more than 57% in the last 12 months and while demand metrics have shown signs of stabilisation, there are still some metrics that keep us wary. 

Twitter mentions, which represents a sign of rising or declining demand, are still on the slide (the jump in February was linked to a competition, not rising demand), while consumer happiness is firmly negative…or, in other words, customers are unhappy. 

With Ocado one of the more expensive supermarkets, and inflation remaining elevated, there are too many headwinds for us to ignore. OCDO also remains the most shorted London-listed stock.

By Sam Boughedda