Amazon (AMZN): Takeaways From Online Pharmacy Call - Citi
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Citi analyst, Mark May, reiterated his Buy rating on shares of Amazon.com (NASDAQ: AMZN) after hosting a conference call for clients to discuss the emerging online pharmacy market with the CEO of privately-held PillPack (TJ Parker), the largest online pharmacy in the country.
1) The size of the market opportunity in the U.S. is ~$400bn, with ~80% of that market being particularly well suited for e-commerce given the prominence of recurring prescriptions for chronic illnesses.
2) Obtaining licenses in every state for e-commerce pharmacy operation is not intellectually challenging but takes 12-18 months from start to finish.
3) 30mm Americans take 5 or more medications, which represents more than $100bn of the $400bn in domestic prescription spend.
4) Logistics/distribution is one of the three key elements of pharmacy and Amazon can do this as well as any. Amazon’s primary challenge will be developing a front-end tool for the customer experience – making sure the right prescriptions are sent at the right time.
No change to the price target of $1,400.
Shares of Amazon.com closed at $1294.58 yesterday.
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