Wedbush analyst Michael Pachter weighed in today with a few insights on Amazon.com, Inc. (NASDAQ:AMZN), as the online retail giant will offer same day delivery in 14 major metropolitan areas for no cost to its Prime members on orders over $35. The analyst maintained a Neutral rating on the stock with a price target of $435, which represents a slight upside potential from current levels.
Pachter wrote, “We think that a same day delivery option is an incremental traffic driver, and will likely increase the number of Prime members. Perhaps more importantly, same day delivery takes away one key advantage of brick-and-mortar retail—the ability to “get it now”. The working population in the U.S. can order before or during the work day, and can expect delivery before bedtime. We think this is a compelling reason for many households still loyal to brick-and-mortar retail stores to shift incremental purchases to Amazon. Ultimately, we think this is a slight positive for Amazon, as the more rapid delivery certainly comes at a cost. Likewise, we think that this is a serious negative for any brick-and-mortar retailer that competes with Amazon.”
Furthermore, “We think that consumers generally make a trade-off between low price and convenience. Shopping online is convenient, but when the perceived need is immediate, consumers have historically opted to visit retail stores. We expect Amazon to continue its expansion to several more U.S. cities in the near-term with both its same day and Prime Now delivery options, increasing its market share in each region. We think that by offering free service to its Prime members, Amazon is closing the gap between low price and convenience, and offering both.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Pachter has a total average return of 0% and a 46.6% success rate. Pachter is ranked #2710 out of 3610 analysts.