Could Amazon Bring Its Cashierless 'Go' Store Concept To Whole Foods?

Amazon.com, Inc. AMZN opened its first Go store to the public this week, and one analyst said the cashierless warehouse is just the beginning of a grocer revolution.

The Rating

DA Davidson analyst Tom Forte maintained a Buy rating on Amazon and increased the price target from $1,500 to $1,800.

The Thesis

Forte expects Amazon to leverage Whole Foods Market to increase its presence in physical stores and thereby boost online sales. (See the analyst's track record here.)

The anticipated strategy includes continued price cuts across categories, the integration of Amazon Lockers, devotion of floor space to Amazon’s hardware and the use of automated services, the analyst said. 

“With Amazon Go now out of beta, we anticipate the company will add the technology to Whole Foods locations in the future as a means to manage labor by, for example, enabling consumers to purchase prepared foods and other items without visiting a cashier,” Forte said in a Thursday note. 

The analyst said he'll listen for comments on Amazon’s Feb. 1 earnings call.

DA Davidson's relatively positive quarterly forecasts — including 38.4-percent sales growth and a 41-percent increase in Amazon Web Services — inspired Forte’s price target increase. He also predicts Whole Foods sales of $5.2 billion, representing about 8.6 percent of total revenues.

Price Action

At the time of publication, shares were trading up nearly 1 percent pre-market at a rate of $1,370.50.

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Photo courtesy of Amazon.