Last week, Loup Ventures boldly predicted Amazon.com, Inc. AMZN’s 2018 acquisition of Target Corporation TGT.
At the end of last year, Citigroup’s Paul Lejuez named potential targets in Abercrombie & Fitch Co. ANF, Bed Bath & Beyond Inc. BBBY, RH RH, Kohl’s Corporation KSS and Kroger Co 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 SHLD or JC Penney 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.
Price Action
Amazon was trading marginally higher at $1,252.15.
Related Links:
Amazon Is The Mad Scientist Of Retail
NYU's Scott Galloway: Amazon Doesn't Need To Acquire Target
Drug Stores Next On The Amazon Hit List?
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