Ocado (LON: OCDO) shares tumbled at the open on Thursday, fuelled by an analyst downgrade.

Ocado — which we are yet to be convinced about from a current demand perspective — was cut to Underperform from Sector Perform at RBC Capital.

Despite the early fall, its share price is now back above Wednesday’s closing price and the 700p mark.

RBC analyst Sherri Malek, also slashed the firm’s price target on the stock to 560p from 800p, telling investors in a research note that the firm is cautious about the recovery for the European internet sector and continues to see downside to revenue and earnings estimates for retail stocks.

Malek stated that the firm views Ocado’s medium targets as “ambitious” and sees risk for additional financing.

In our view, over the long-term, we are more neutral regarding Ocado shares, but based on our analysis of the current macro environment and demand trends, we see a potential downside to Ocado’s share price.

Current consumer sentiment skews negative while website traffic data from Semrush suggests demand is waning.

According to Tipranks, out of six analysts, five have a Sell rating on Ocado, with one at Hold. The average price target between those analysts is 621.26p, suggesting a potential 11.66% downside form current levels.