Analyst Echoes Predictions Amazon Will Buy Retailer: 'Downtrodden Big Box, Department Store Player'

Last week, Loup Ventures boldly predicted Amazon.com, Inc. AMZN’s 2018 acquisition of Target Corporation TGT.

At the end of last year, Citigroup’s Paul Lejuez named potential targets in Abercrombie & Fitch Co. ANF, Bed Bath & Beyond Inc. BBBY, RH RH, Kohl’s Corporation KSS and Kroger Co KR.

Now, BMO Capital Markets is reaffirming the Street’s Amazon M&A thesis.

The Rating

BMO Capital has a Buy rating on Amazon with a $1,200 price target.

The Thesis

The firm expects Amazon to buy a retailer in 2018.

“We think it will continue its expansion into physical stores with the acquisition of a downtrodden big box / department store player,” John Kim and R. Jeremy Metz wrote in a Tuesday note.

While stores like Sears SHLD or JC Penney JCP may be ripe for a takeover, the analysts didn't speculate potential targets but justified the vague thesis with Amazon’s 2017 purchase of Whole Foods, which seemed to reinforce the perceived importance of brick-and-mortar shops.

“While Amazon’s ultimate intentions and plans have remained close to the vest at this point, we don’t think this is the end of the e-commerce giant’s push into physical retail where it can morph its desires to grow in softlines/hardlines with added scale and, more importantly, tangible supply chain benefits,” the analysts wrote.

They noted the e-commerce leader’s significant impact on real estate and the importance of its physical retail presence to REITs.

Price Action

Amazon was trading marginally higher at $1,252.15.

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