Amazon's (AMZN) Venture into Shipping May Extend Competition to UPS (UPS) and FedEx (FDX) - Baird

Baird analyst, Colin Sebastian highlighted the opportunity for Amazon (NASDAQ: AMZN) to enter the Global Logistics business in an October 19th note and according to a newly published article on Motherboard (link), Amazon launched an air cargo operation in September in Wilmington, Ohio on a trial basis. Other media reports have also suggested Amazon is recruiting "senior executives" within the small package industry to support the launch of a shipping service in 2016.

According to the analyst, the global fulfillment market represents a $400-$450 billion incremental market opportunity and Amazon may be the only company with the fulfillment/distribution sophistication and scale to compete effectively with incumbent service providers (UPS, FedEx). Amazon may have an advantage though, its loss tolerant investor base that may be more forgiving of lofty multiples and EBITDA valuations as the company invests in low margin businesses to gain a competitive advantage.

No change to the Outperform rating and $710 PT.

Baird Outperform Amazon.com (NASDAQ: AMZN) price target of $710.00

For an analyst ratings summary and ratings history on Amazon.com click here. For more ratings news on Amazon.com click here.

Shares of Amazon.com closed at $678.99 yesterday.

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