Analyst Echoes Predictions Amazon Will Buy Retailer: 'Downtrodden Big Box, Department Store Player'

Last week, Loup Ventures boldly predicted Amazon.com, Inc. (NASDAQ:AMZN)’s 2018 acquisition of Target Corporation (NYSE:TGT).

At the end of last year, Citigroup’s Paul Lejuez named potential targets in Abercrombie & Fitch Co. (NYSE:ANF), Bed Bath & Beyond Inc. (NASDAQ:BBBY), RH (NYSE:RH), Kohl’s Corporation (NYSE:KSS) and Kroger Co (NYSE:KR).

Now, BMO Capital Markets is reaffirming the Street’s Amazon M&A thesis.

The Rating

BMO Capital has a Buy rating on Amazon with a $1,200 price target.

The Thesis

The firm expects Amazon to buy a retailer in 2018.

“We think it will continue its expansion into physical stores with the acquisition of a downtrodden big box / department store player,” John Kim and R. Jeremy Metz wrote in a Tuesday note.

While stores like Sears (NASDAQ:SHLD) or JC Penney (NYSE:JCP) may be ripe for a takeover, the analysts didn't speculate potential targets but justified the vague thesis with Amazon’s 2017 purchase of Whole Foods, which seemed to reinforce the perceived importance of brick-and-mortar shops.

“While Amazon’s ultimate intentions and plans have remained close to the vest at this point, we don’t think this is the end of the e-commerce giant’s push into physical retail where it can morph its desires to grow in softlines/hardlines with added scale and, more importantly, tangible supply chain benefits,” the analysts wrote.

They noted the e-commerce leader’s significant impact on real estate and the importance of its physical retail presence to REITs.