STOCKS NEWS EUROPE-Ocado lifted by bullish Goldman note

Shares in online grocer Ocado jump 8 percent to 462.66 pence, top gainers on Britain's midcap FTSE 250 (FTSE: ^FTMC - news) index in strong volume, with traders citing a bullish Goldman Sachs (NYSE: GS-PB - news) note as the driver.

Goldman has a "buy" recommendation on Ocado with a 545 pence target price, removing its previous "not rated" designation on the shares.

Goldman, in a note, says that Ocado's joint venture with Wm Morrison Supermarkets (LSE: MRW.L - news) , announced in May 2013, significantly extends its capital advantage over store-based incumbents with asset turnover of its second distribution centre at over 7 times compared to a traditional grocer's 1.4 times.

It also notes that the joint venture provides for fees payable to Ocado as it operates Morrison's online business.

Further, the bank reckons Ocado could accelerate distribution centre development as sales growth picks up, and assumes that a third centre will open in FY2016.

Trading volume in Ocado stands at around 70 percent of its 90-day daily average, against the FTSE 250 index on just 13 percent.

Reuters messaging rm://tricia.wright1.thomsonreuters.com@reuters.net