Ocado (LON: OCDO) shares received a much-needed boost to start the week after the online grocery firm was upgraded at Exane BNP Paribas.

Analyst Andrew Gwynn upgraded the firm to Neutral from Sell due to a lack of further negatives. Ocado shares have tumbled 35% this year, but the upgrade saw its shares close 3.6% higher on Monday.

The analyst cited Ocado’s outlook as well as market sentiment, which he said now appears much better aligned. Gwynn also stated that it was the correct time for the upgrade following a significant underperformance from the firm.

Ocado’s Q1 results showcased retail revenue grew 3.4% to £584m, and average orders per week were up 3.6%. However, the group reported a 7.5% fall in basket size as inflation continues to impact consumer spending.

While we have been bearish on Ocado previously, due to demand trends such as Twitter mentions, web traffic, and Google searches remaining subdued over the last six months, we have also taken a more negative stance due to the significant decline in its share price.

However, we believe demand for Ocado’s service remains low as consumers look to switch to cheaper outlets.

By Jamel Boughedda