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Ocado stocks are down after a morning rally as investors cash in on profits

LONDON — Online supermarket Ocado's share price fell on Monday despite the company announcing its first international deal.

Ocado's shares initially rose by 7% in early hours trading on Monday but turned negative by late afternoon, closing down more than 1%.

Analysts said that the drop could be driven by investors cashing in on profits, with shares having risen by around 37% in the last two months.

Ocado first announced plans to sign an international deal back in 2015, promising progress by the end of the year. After over a year of delays, the online grocer on Monday finally announced a tie-up.

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An unnamed retailer, that "wishes to remain anonymous until it launches its online business in order to retain competitive advantage," has signed up to use Ocado's Smart Platform, logistics software that helps grocers deliver an online service.

The retailer will not use Ocado's automated picking technology to put baskets together, ready for delivery, but the agreement gives the customer the option to request this in future. The retailer will pay an upfront fee as well as on-going licensing fees based on volume of products sold.

The announcement sent Ocado's stock popping more than 7% but it finished the day down 1.55% from the open:

Screen Shot 2017 06 05 at 16.52.46
Screen Shot 2017 06 05 at 16.52.46

Markets Insider

Neil Wilson, a senior market analyst at ETX Capital, told Business Insider on Monday afternoon: "From what I can see the shares have dipped on profit taking amid the realisation that this deal is not in itself a game changer. If you'd held these shares for a while hoping for a deal, this might be the excuse to ditch them given the jump earlier."

He added in a morning note: "The devil is in the detail and while welcome it’s unclear what actual value this deal in itself will bring to Ocado. Financial details about the tie-up are non-existent at present. The European retailer will not be using Ocado’s automated warehouse technology.

"We don’t even know who the company is — Ocado simply dubs it a 'regional' retailer (not a national one). This is progress after a lot of promises, but it’s not exactly like doing a deal with Wal-Mart — yet."

CEO Tim Steiner called the deal "an exciting step in the evolution of our business and in the delivery of our strategy." Ocado's long-term goal is to be a software and technology provider to the online grocery market, not an online grocer itself.

FTSE 100 closes slightly down

Elsewhere in stock markets, the wider FTSE 100 closed the day slightly down. The index finished down 0.29% at 7,525.76 points:

Screen Shot 2017 06 05 at 16.55.39
Screen Shot 2017 06 05 at 16.55.39

Markets Insider

The biggest fallers included Chilean copper mining group Antofagasta, down 3.54%, airline easyJet, down 3.24%, and software firm Sage Group, down 2.67%.

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