Analyst Gene Munster of Piper Jaffray weighed in on Amazon.com, Inc. (NASDAQ:AMZN) yesterday after the company doubled its Prime Now cities in the last two months alone, adding 13 metro areas for a total of 26. Similarly, the company added same-day shipping to three new metro areas this past year, equaling 16 in total, and expanded its same day product offerings by 49% y/y. Prime Now offers free same day delivery for orders above $35, and same hour delivery for a $7.99 fee. The service is available in certain cities in the U.S., Canada, the U.K., Italy, and Japan.
The analyst believes these services are “powerful competitive initiatives [that] can fundamentally change retail shopping to online” by creating an “instant gratification market.” He pointed to Prime Now’s record Christmas Eve sales as “evidence of this instant gratification theme.” He also states that Prime Now’s same day/hour delivery is eliminating the need for in-store pick up services offered by brick and mortar stores, which used to be their “competitive advantage over Amazon.” According to Munster, “The hassle of shopping is removed, for minimum and incremental cost.”
The analyst is also bullish regarding Prime App downloads, as the Google Play store reported between 1 million and 5 million app downloads with a 4/5 rating. Finally, the analyst expressed positive sentiment on the flexibility of Prime Now’s hours, stating an increased time-frame for same-day deliveries. Munster reiterated his Overweight rating for the company with a $800 price target.
Analyst Gene Munster is ranked #2 out of 3,709 analysts on TipRanks. He has a 63% success rate recommending stocks with an average return of 22.4% per recommendation.
According to TipRanks’ statistics, out of the 30 analysts who have rated Amazon in the last three months, 26 gave a Buy rating while 4 remain on the sidelines. The average 12-month price target for the stock is $748.36, marking an 11% upside from where shares last closed.