Ocado stumbles after stellar year A downgrade from Deutsche Bank meant Ocado, London's best-performing large cap over the past 12 months, fell out of favour. The online grocer was being valued at a premium to Amazon in spite of delivering slower historic growth and facing greater competitive pressures, said Deutsche. Bryce Elder The big-four UK supermarkets will chase online market share vigorously to help cover the cost of their store estates and are making healthy enough margins to make the investments required, Deutsche argued. But Ocado's margins were already so low that any additional investment would revive cash flow concerns, the broker said. And, with an enterprise valuation of 43 times 2014 operating earnings, the chances of a bid for Ocado looked slim, Deutsche continued. "In our view, Ocado's attraction as a take-out candidate is limited to retailers operating out of the UK, selling both grocery and non-food and with the potential to internationalise Ocado's intellectual property," it said. We expect that given enough time and resources, some elements of Ocado's business model are replicable and, at the moment, Ocado is simply too expensive to justify a bid premium. Deutsche put a 440p price target on Ocado, which fell 3.5 per cent to 505p. The shares have risen sixfold over the past 12 months after Ocado management repaired its balance sheet and shifted the business focus towards licensing its delivery and logistics systems internationally. A subdued wider market left the FTSE 100 up 13.88 points, or 0.2 per cent, to 6,829.30. For the week, the index rose 1.3 per cent to move within touching distance of its 14-year high. Car insurers led Friday's gainers after industry data suggested pricing pressure on premiums was beginning to ease, which bolstered hopes that hostilities would cease after a two-year sector price war. Admiral jumped 6.1 per cent to £14.07, a six-month high, while ESure took on 6.1 per cent to 284.5p and Direct Line advanced 4.4 per cent to 266.6p. A retread of speculation that Qatar Investment Authority has been looking again at possible the UK retail sector targets helped lift Marks and Spencer, ahead 1.8 per cent to 486.5p, and J Sainsbury, which rose 2.1 per cent to 368.6p. Bookmakers slipped after William Hill cut 2014 guidance to reflect a £20m hit from unusually adverse football results. William Hill lost 3.4 per cent to 360.1p while Ladbrokes, which had reassured on trading the day before, was down 5.1 per cent to 167p. Glencore led the miners, up 3.3 per cent to 338.2p, on reports that a Chinese consortium led by China Minmetals was the only bidder left in the auction for the Las Bambas copper mine in Peru. The rest of the sector extended its recent rally with Antofagasta ahead 1.7 per cent to 846.5p and Rio Tinto up 1.5 per cent to £33.83. Royal Dutch Shell B lost 1.1 per cent to £22.80 as investors shrugged off a profit warning, which was widely interpreted as new chief executive Ben van Beurden resetting expectations ahead of his strategy review due in March. A call from opposition leader Ed Miliband for the big-five banks to sell more branches had little noticeable effect on share prices with Barclays edging 0.6 per cent lower to 288.6p and Lloyds Banking Group down 0.7 per cent to 83.5p. Royal Bank of Scotland was the sector laggard, down 2.1 per cent to 363.7p on a downgrade to "sell" from Investec Securities. FirstGroup lost 1.3 per cent to 141.2p after its third-quarter trading update showed a weaker than expected performance for its US school bus business, due to rising costs and bad weather. The weak performance was seen as another setback for Sandell Asset Management, the US hedge fund lobbying for FirstGroup to sell and spin off its US operations. Ophir Energy rose 1.8 per cent to 305p amid talk that a stock overhang had cleared with about 0.8 per cent of the explorer changing hands in two blocks. Traders also noted unusually high turnover in Rentokil Initial, which closed 0.4 per cent lower at 122.8p.