Market Overview

Bernstein: Amazon Flex Is No Threat To FedEx, UPS

Share:
Bernstein: Amazon Flex Is No Threat To FedEx, UPS

Amazon.com, Inc. (NASDAQ: AMZN) investors are always on the lookout for the company’s next disruptive business, and some believe it could be parcel delivery. Amazon Flex is not a major threat to United Parcel Service, Inc. (NYSE: UPS) and FedEx Corporation (NYSE: FDX), according to Bernstein analyst David Vernon. 

Amazon Flex is Amazon’s crowdsourced delivery model that could potentially challenge FedEx and UPS, but Vernon said Flex has major limitations.

“We see limited risk of full-scale diversion of volume from traditional carriers to crowdsourced models due to the constraints required to build efficient flex blocks and limitations on supply of ‘right-timed’ labor,” the analyst said in a Thursday note. 

The pay rate for Amazon Flex drivers is not high enough to stimulate full-time job growth, Vernon said. Amazon Flex drivers earn about $11 per hour on average, but take home only about $5 per hour after costs are factored in, he said. 

Crowdsourced delivery services are most effective during peak holiday delivery season and can actually serve to alleviate some of the holiday pressure on FedEx and UPS, according to Bernstein. 

After exploring the impact Amazon Flex is having on the delivery business, Vernon concluded that FedEx and UPS are both undervalued at the moment based on excessive fear of Amazon.

“We do not see the growth of crowdsourced delivery models as destabilizing to the capacity and pricing picture for residential small package delivery,” he said.

In an email follow-up with Benzinga, an Amazon representative disputed Bernstein's wage estimates for Amazon Flex drivers and said Flex drivers earn between $18 and $25 per hour for package delivery.

Bernstein has Outperform ratings for FedEx and UPS and price targets of $296 and $137, respectively.

Related Links:

Report: Trump Is 'Obsessed With Amazon' — And The Stock Is Falling 

The Amazon Tax Predicament

Latest Ratings for AMZN

DateFirmActionFromTo
Sep 2019MaintainsOutperform
Aug 2019AssumesBuy
Jul 2019MaintainsOutperform

View More Analyst Ratings for AMZN
View the Latest Analyst Ratings

Posted-In: Bernstein David VernonAnalyst Color Price Target Reiteration Top Stories Analyst Ratings Best of Benzinga

 

Related Articles (AMZN + FDX)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
HSKACanaccord GenuityMaintains75.0
AVGOMorgan StanleyMaintains265.0
AMATNeedhamMaintains56.0
VOYACitigroupMaintains62.0
VCCitigroupMaintains86.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Petrobras Responds To Brazilian Trucking Strike — And Receives 3 Big Downgrades

President Trump Cancels Summit With Kim Jong Un