Analyst Says Amazon Is Now An 'Essential' Portfolio Holding

If it weren’t already, Argus Research is calling Amazon.com, Inc. AMZN an "essential" holding.

In what has turned out to be one of the most disruptive companies this millennium, this multi-industry juggernaut is a must in most portfolios according to Argus analyst Jim Kelleher.

Following its Whole Foods acquisition, Amazon has just scratched the surface of the potential of this deal and is positioned to enter new markets. The discounting that Amazon introduced at Whole Foods is not expected to have much of a material impact on the company’s margins.

The synergies between Whole Food shopping and Amazon’s prime membership is a key element of the benefits Amazon is poised to reap as a result of the deal.

“While there is good alignment between Amazon Prime members and Whole Foods shoppers the alignment is not complete. Bring systems efficiencies and delivery options to Whole Foods should result in more WFM shoppers adopting Prime, and more Prime users shopping online and physically at Whole Food,” said Kelleher (see his track record here).

Argus has reiterated its Buy rating on Amazon with a $1,150 price target, but noted that its fair valuation analysis places its fair value above $1,250.

Amazon’s strategy has been to please the customer and not Wall Street, but ironically has made the company irresistible to Wall Street, says the analyst. Amazon shares are up 29 percent year to date.