Amazon.com (AMZN): Fulfillment Scale Should Drive A Decade Of FCF Leverage - Piper Jaffray
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Piper Jaffray analyst, Gene Munster, reiterated his Overweight rating on shares of Amazon.com (NASDAQ: AMZN) after conducting a deep dive on Amazon's fulfillment network. The analyst came away incrementally more positive on two things: 1) the company's progress at gaining proximity to the population and 2) the evolving strategies and technologies that can ultimately drive significant fulfillment leverage over the next decade.
The analyst noted "Amazon has a fulfillment node within 20 miles of 44% of the US population (vs 38% in 2015) and robotics, vertically integrated transportation services, drone delivery, and autonomous trucks should drive long-term shipping & fulfillment expense leverage. Many investors have historically viewed Amazon's shipping and fulfillment costs as perpetual burdens". However, he believes this is a competitive advantage for two key reasons: 1) it reduces Amazon's per unit fulfillment cost as the dispersion of inventory improves and involvement of 3rd party couriers decreases and 2) it enables same-day and same-hour delivery, which is the next key eCommerce battle ground.
No change to the price target of $900.
Shares of Amazon.com closed at $772.44 yesterday.
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Related EntitiesPiper Jaffray, Gene Munster
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