Shares in Ocado plunged nearly 20% after key US customer Kroger raised doubts about their partnership, leaving shares down around 30% for the year and 92% over five years. Analysts warn that ending the Kroger deal could hinder future partnerships. Meanwhile, rivals Tesco and Sainsbury’s continue to perform well, up around 20% this year.

Ocado is considered undervalued by Morningstar and is trading below its fair value estimate. The company’s growth relies on e-grocery expansion, with uncertainty surrounding current partnerships. Tesco, seen as fairly valued, has completed a successful turnaround, making it Morningstar’s top pick in the European grocery sector. Sainsbury’s is also fairly valued, with a strong presence in key UK regions but facing tough competition.

Morningstar has reinitiated coverage of Tesco and Sainsbury’s, with the former considered fairly valued and the latter trading at a discount. Tesco has undergone a successful turnaround, while Sainsbury’s holds strong market share in lucrative regions but faces tough competition from discounters. Marks & Spencer, with a retail partnership with Ocado, has a 4.5% market share and is fairly valued.

Read more at Morningstar: After Ocado’s Share Price Slump, Are UK Supermarket Stocks Attractive?