Amazon (NASDAQ:AMZN) shares are up nearly 2% in Thursday’s trading session, after the retail giant announced plans to acquire online pharmacy PillPack for an undisclosed amount in a deal that is expected to close in the second-half of 2018. PillPack describes itself as “a new kind of pharmacy” and under the Amazon umbrella, the incumbent pharmacies face a frightening, new competitor.
SunTrust’s top analyst Youssef Squali commented, “Amazon’s entry into the pharmacy vertical through the acquisition of PillPack adds yet another leg to the growth story. The move makes strategic sense to us for a number of reasons, including a) a sizable opportunity (~$270B), which is primarily offline, b) Amazon’s large and growing base of Prime users, c) scope for logistical efficiencies by leveraging Amazon’s delivery network, d) increased usage and consumer mind-share for Amazon and e) potential synergies from pick-ups at WFM and reordering via Alexa.”
“We believe that Amazon had been looking to enter the vertical for some time and note the transaction would also complement the OTC private label brand Basic Care, which Amazon launched in Aug. 2017. We believe AMZN’s large and growing customer base (including ~70M US Prime members), logistics network for fast delivery and Alexa technology for easy reordering can create a compelling pharmacy offering over time,” the analyst continued.
Net net, Squali reiterates a Buy rating on Amazon shares, with a price target of $2,000, which represents a potential upside of 18% from where the stock is currently trading.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Youssef Squali has a yearly average return of 22% and a 72.5% success rate. Squali has a 47.4% average return when recommending AMZN, and is ranked #45 out of 4825 analysts.
How does Squali’s bullish forecast echo against the word of the Street? Quite positively, it seems, as TipRanks analytics exhibit AMZN as a Strong Buy. Based on 35 analysts polled in the last 3 months, 34 recommend a Buy on Amazon stock while only 1 issues a Hold. The 12-month average price target stands at $$1,888.59, marking a nearly 12% upside from where the stock is currently trading.