Influential tech analyst Gene Munster of Loup Ventures thinks retail giant Amazon.com Inc. (AMZN) will buy brick-and-mortar competitor Target Inc. (TGT) in the upcoming year, according to a report on CNBC. By bringing Target into its fold, Amazon would carry out its larger initiative to lure in "moms" and get them hooked on its monthly Prime subscription offering, according to Munster. (See also: Amazon’s Next Step: Reduce Reliance on UPS, FedEx?)
In a report highlighting eight predictions for the technology industry in 2018, Munster said his “boldest” call for the year revolves around the fact that Target is the “ideal offline partner for Amazon.” Minneapolis-based Target’s stock gained more than 3.6% on Tuesday following the report.
Munster co-founded Loup Ventures in 2017, a venture capital firm with a focus on virtual reality and artificial intelligence. Previously, he was an analyst at Piper Jaffray for more than two decades, gaining prominence for his accuracy in predicting Apple Inc.’s (AAPL) financial potential.
Target as Takeover Target?
“Amazon believes the future of retail is a mix of mostly online and some offline,” wrote the analyst. It's been six months since Amazon shook up the traditional grocery retail space with its blockbuster $13.7 billion acquisition of organic food chain Whole Foods Market.
Munster sees Target as a good fit for Amazon primarily due to its shared demographic and “manageable but comprehensive store count.” The well-known technology analyst highlighted the fact that both companies focus on mothers and families, writing that “Target's focus on moms is central to Amazon's approach to win wallet share.”
“Getting the timing on this is difficult, but seeing the value of the combination is easy,” wrote the long-time Apple bull, who expects a deal value around $41 billion, compared TGT’s market cap of approximately $36.8 billion at Tuesday close.
In November, D.A. Davidson analysts wrote a note suggesting that Lululemon Athletica Inc. (LULU) is an attractive target for the e-commerce giant, while Citigroup highlighted potential takeouts including Abercrombie & Fitch Co. (ANF), Bed Bath & Beyond Inc. (BBBY) and Advance Auto Parts Inc. (AAP). (See also: Amazon Forces Suppliers to Play by Its Rules.)