In September, Amazon (NASDAQ:AMZN) unveiled “Supply Chain by Amazon,” a service designed to offer sellers a comprehensive set of automated solutions. This suite of services is intended to facilitate the seamless movement of products from their manufacturing sites to the customers, all under the centralized management of the Supply Chain by Amazon hub.
The service is nothing less than a “game changer,” says Truist’s Youssef Squali, a 5-star analyst rated in the top 4% of the Street’s stock pros. “We believe the move to provide an end-to-end set of logistical solutions to a wide-ranging set of merchants enables AMZN to position itself at the center of transactions both online and offline that are not on the Amazon Marketplace today,” Squali explained.
The top analyst believes the move offers Amazon several strategic benefits in both the short and long term. For one, it provides access to data related to off-Amazon transactions, which can provide valuable insights into product gaps, pricing strategies, and demand for Amazon’s own inventory. This data can also foster customer loyalty. Secondly, due to increased scale, it offers a reduction in the per-unit fulfillment costs for Amazon’s core operations.
It also brings the potential for additional revenue streams, including serving the approximately 54% of the US eCommerce market that Amazon doesn’t currently control (according to Squali’s estimate). There’s also the prospect of tapping into offline commerce, which still constitutes over 80% of global commerce.
“We believe the suite of services provided through this centralized hub makes it easier, faster and cheaper for merchants to onboard and manage their end-to-end processes, and can drive incremental revenue for them,” Squali went on to add,
While it’s still early days, Squali sees it as a “$100B+ opportunity for the taking and AMZN’s well positioned to capitalize on it.”
All told, Squali reiterated a Buy rating on the shares to go alongside a $176 price target, suggesting the stock can deliver gains of 33% over the coming year. (To watch Squali’s track record, click here)
In total, 41 analysts have provided assessments of AMZN over the past 3 months, and barring one skeptic, all are positive, providing the stock with a Strong Buy consensus rating. Going by the $176.18 average target, investors will be locking gains of 33% a year from now. (See Amazon stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
