Online grocer Ocado saw its share price fall yesterday (August 31) after a leading retail analyst predicted a decline in its market share and questioned its growth strategy.

Morgan Stanley analyst Geoff Ruddell capped the retailer’s target price at 80p, which values it at less than half its 180p per share list price. In a story in today’s Telegraph, Ruddell said he expected Ocado to lose market share, rather than grow, and questioned whether a second distribution centre, due to open shortly, will be profitable.

In a note to clients, Ruddell said: “We are big fans of Ocado’s customer proposition, but are less keen on its business model.”

His comments led to shares falling to 142p, which is down 2p on last Friday, and more than 20% down on its IPO price, which has been slipping since its flotation. Morgan Stanley was not involved in Ocado’s IPO, giving it an “underweight” recommendation.

HSBC and Goldman Sachs rallied around the retailer in a series of other research notes published yesterday. HSBC, which acted as co-bookrunner on the IPO, said the weakness in its shares represented a good buying opportunity and gave it a 190p target price. Goldman Sachs, joint bookrunner and sponsor on the flotation, said Ocado’s offering remain “superior to other online grocers in the UK.”

Ocado is due to release a trading update next week.