How Amazon's Edging Closer To Retail, E-Commerce Dominance: Smart TVs

Through a partnership with Best Buy Co Inc BBY to distribute Alexa-enabled smart TVs, Amazon.com, Inc. AMZN is expected to more deeply penetrate both brick and mortar retail and the consumer home.

It’s good news for Amazon — and not so good news for everyone else.

The Rating

Morgan Stanley analysts Brian Nowak, Simeon Gutman and Jonathan Lanterman maintained an Overweight rating on Amazon with a $1,500 price target.

The Thesis

Amazon’s leveraging of brick and mortar retail, which enables consumer conversion through in-store demos, compounds a more commanding control of the e-commerce market.

The firm’s TV voice-search integration is seen to eliminate friction in the common shopping experience, stimulate changes in consumer behavior, and “further its competitive lead” against retail rivals and Alphabet Inc GOOGL.

“This could further Amazon’s retail share gains (as Amazon-powered voice shopping from your couch on your television would become easier) and would potentially improve Amazon’s customer acquisition economics and competitive moats against Google search (as they would not have to pay Google for this traffic or shopping),” the analysts wrote in a note.

Notably, they consider Amazon’s offering an incremental threat to Google considering retail queries comprise 25- to 30-percent of Google’s searches.

Price Action

After closing up 1.6 percent Wednesday, Amazon was set to open up 2.1 percent Thursday at $1,560.

Walmart Inc WMT and Google were also set to open marginally higher of the previous session’s close.

Related Links:

Morgan Stanley: Why The Reported Amazon, Walmart Talks With India's Flipkart Make Sense

Analyst: Why Humana And Walmart Could Make Sense Together