Now that Amazon has seized control of all the organic foods in America, Credit Suisse is calling for another dramatic leg up in its shares — which can only spell dread for KR.
“The product development perspective is that while most of the headlines around the Whole Foods acquisition have been about price cuts, we believe the real path for Amazon to create lasting shareholder value is through fulfillment and delivery via Prime Now,” analyst Stephen Ju wrote in a note to clients Wednesday.
“Hence, while price cuts capture the headlines, we submit that Amazon will wage war with its competitors with service instead.”
Amazon’s real play here is Prime, expanding into Prime Now, which offers free 2 hr delivery.Currently, Prime Now is available in 198 out of 393 Whole Foods locales.
“And as the consumer value proposition for Amazon has always been the combination of price, selection, and delivery we believe the current headlines about price reductions at Whole Foods will be accompanied by expansion of Prime Now delivery-enabled zip codes,” he wrote.
Credit Suisse upped their price target to $1,350 from $1,00 this morning.If you enjoy the content at iBankCoin, please follow us on Twitter