Tech enthusiast Gene Munster is making a confident call for 2018: the market expert sees three clear-cut reasons why odds are on Amazon.com, Inc. (NASDAQ:AMZN) taking over Target this year. Why should you trust Munster’s opinion? Consider that this is an analyst who was smart enough to bet on Apple before the first iPhone.
From his research-driven, venture capital firm Loup Ventures, the analyst notes that even with a deep-rooted online presence and leg way as the leader in shopping on the world wide web, the biggest online retail king of the globe will purchase Target by the end of the year. Considering the “realities” of Amazon and Target alike, it is not such a “bold” forecast for this merger to realize, as far as Munster is concerned.
Notably, “Offline sales will always be a big part of retail,” the research analyst writes, adding, “It’s no secret that online retail is slowly killing offline.” In the fourth quarter of last year, Munster’s firm ventures roughly 10% of total domestic retail sales, which translates to around $125 billion transpired online. Therefore, “The longer-term question is: How much of total retail will eventually happen online? Based on our analysis of U.S. retail sales by category (excluding gas and restaurant expenditures), 55% of total retail sales should eventually happen online,” Munster wagers.
The analyst continues, “Even if half of commerce shifts to online, that still leaves a massive market offline at 45%. People in the future will still want to pick up groceries at a local store. As retail changes dramatically going forward, the biggest winners will promote both online and offline opportunities.”
Meanwhile, consider that both Target and Amazon have the same “core” audience: consumers boasting high incomes. It would be a savvy merger, as Munster underscores, “In my years of observing tech companies, I’ve seen that owning a demographic usually yields the best results.”
As “brick and mortar […] get more advanced,” Munster skips ahead to a future one decade from today, where he anticipates the e-commerce king to “convert Target and Whole Foods stores to an automated model with few employees.” Looking at this crystal ball, the research analysts sees blurred lines separating online shopping from automated brick and mortar stores, “as cost-focused stores become more like smart warehouses.” With less employees in the stores, the few there would prioritize “understanding and empathy” in personalizing the in-store service, which the analyst wagers will allow retails to set themselves apart from the rest.
TipRanks points to a robust bullish camp taking the gamble on this e-commerce darling, with a whopping 32 out of 33 analysts polled in the last 3 months rating a Buy on Amazon stock. With a return potential of nearly 6%, the stock’s consensus target price stands at $1,335.84.