Amazon is reportedly in talks with Simon Property Group to convert some of its closed department stores into the online retailer’s fulfillment centers. According to The Wall Street Journal report, the companies are discussing to utilize the vacated spaces which were earlier operated by Sears and J.C. Penney.
The deal, if materializes, is expected to boost Amazon’s (AMZN) last-mile delivery capabilities. Simon Property has 63 J.C. Penney and 11 Sears stores, all located at key residential places. Therefore, by turning these stores into fulfillment centers will help Amazon in speedy delivery and ensure customer satisfaction, a key selling-point for e-commerce retailers.
The growth in Amazon’s online retail business has accelerated during the COVID-19 pandemic. The shelter-in-place directives to contain the virus spread led to a 40% year-over-year increase in the company’s 2Q revenues.
Following its 2Q results on Jul 30, J.P. Morgan analyst Doug Anmuth lifted the price target on Amazon to $4,050 (27.9% upside potential) from $3,000. In a client note, Anmuth said, “We believe Amazon is well positioned as the market leader in e-commerce and public cloud, where the secular shifts remain early.”
Overall, Amazon has a Strong Buy analyst consensus. With shares up about 71% year-to-date, the average analyst price target of $3,724.09 implies another 17.6% upside potential over the coming year. (See AMZN stock analysis on TipRanks).
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