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Amazon Looks Primed To Disrupt Wal-Mart, Target, CVS, Walgreens

A major expansion by Amazon.com ( AMZN ) into private-label goods, which could come this month, elevates its ability to further challenge legacy retailers across the board. Cowen analyst John Blackledge estimates Amazon will be the No. 2 player in the $425 billion consumable market, excluding food and beverage, surpassing Walgreens Boots Alliance ( WBA ), CVS Health ( CVS ) and Target ( TGT ) but still lagging well behind market leader Wal-Mart ( WMT ). He defines consumables as four segments: personal care products, household products, baby products and pet products. Blackledge also estimates Amazon will be a top-10 player in the $785 billion food and beverage grocery market by 2019. “We are encouraged by Amazon’s growing footprint in this category, which we see as ripe for potential disruption, given younger demos increasingly purchasing grocery items via digital channels,” Blackledge wrote. The leader in the food and beverage category is Wal-Mart, followed by Kroger ( KR ), Albertsons/Safeway and Costco Wholesale ( COST ). Last week, the Wall Street Journal cited people familiar with the matter as saying Amazon is set in the coming weeks to roll out new lines of private-label brands that will include its first broad push into perishable foods. According to the Private Label Manufacturers Association, sales of private-label store brands in the U.S. topped $118 billion in 2015, with supermarkets and drug chains accounting for over $70 billion of the total. In the grocery and consumables market, Blackledge says, Amazon’s growth has come at the expense of Wal-Mart, Target. Walgreens and CVS. Amazon’s key competitive advantage is its multiplatform approach with Amazon Prime, which includes same-day delivery for many goods, “all of which should lead to rising number of consumers skipping the trip to the local supercenter, drug store or grocery market,” he wrote. Amazon has sold private-label products since 2009, primarily under the AmazonBasics brand, though that effort has concentrated largely on consumer electronics. Amazon stock rose 0.6% to 702.80 in the stock market today . Amazon stock hit an all-time high of 722.45 on May 12. It carries a strong IBD Composite Rating of 94, putting it among the top 6% of all stocks on key metrics such as revenue growth. Walgreens climbed 1.3% but CVS fell 1.5%. Target climbed 2.4%. Wal-Mart advanced 1%, hitting a nine-month high intraday, after spiking nearly 10% Thursday on strong earnings and same-store sales.

Why Amazon’s World Domination May Come Sooner Than You Think

Loading the player… Amazon ( AMZN ) has solidified its position as an e-commerce leader, and its global takeover may happen sooner than you think. ‘Momentum’ Seen In Apparel A Cowen & Co. report out Wednesday forecasts Amazon displacing Macy’s ( M ) as the No. 1 U.S. apparel retailer by 2017, driven by selection, fulfillment and brand relationships. Amazon’s momentum in apparel is also seen leading to retailer mergers and acquisitions, as well as store closures. Cowen also projects that Amazon will displace Target ( TGT ), Walgreens ( WBA ) and CVS ( CVS ) to become the No.2 company in consumables, behind Wal-Mart ( WMT ), by 2018. The report calculates a compound annual growth rate of 27% for the e-commerce giant’s consumables market. Amazon Worth $3 Trillion? Meanwhile, Social Capital has set a very bullish $3 trillion, 10-year valuation on the stock, with the venture capital firm citing strength across retail and its Amazon Web Services segment. Amazon’s current market cap is about $314 billion, while Apple — the most valuable public company — has about a $515 billion market cap. IBD’s take: How does Amazon stack up vs. its peers? Find out at IBD Stock Checkup After gapping up on its strong earnings report last week, shares are now extended 10% from a cup-with-handle buy point initially cleared in mid-April. The stock is trading about 5% below its all-time high reached at the end of last year, and it was down 1.4% Thursday. Wal-Mart, Macy’s Stocks Lag Meanwhile, Wal-Mart recently plunged below its 50-day line and has yet to retake that level, as it slumped 0.6% in intraday trade. Shares are sitting 16% below their 52-week peak. And Macy’s shares are trading nearly 50% below their all-time high reached last July. They are on track to hit a nearly four-month low Thursday, falling 2.3%.

Allergan Price Target Cut On Merger Delay, Weak Q1 Forecast

Drugmaker Allergan ( AGN ) got a price-target cut from Canaccord Genuity Thursday after the company hit a delay in its merger with Pfizer ( PFE ), among other issues. Analyst Corey Davis noted that on Wednesday, the Federal Trade Commission (FTC) had asked for additional information on the Pfizer-Allergan merger , which was first announced in November. The companies also have to wait until Allergan finishes divesting its generic-drug business to Teva Pharmaceutical Industries ( TEVA ), which itself hit a delay this month that caused Teva to push the expected closing date from Q1 to June. Pfizer and Allergan still expect to close their $160 billion merger in the second half of this year. “In the meanwhile, we are lowering our Q1 estimates (EPS drops from $3.43 to $2.89) as it’s always the weakest quarter for specialty pharma, and we feel the rest of the Street is also too high,” Davis wrote in his research note lowering his price target on Allergan stock to 320 from 340. “This has been a trend in the past several years and is partly because of the reset of Medicare Part D.” Davis added that the merger of Target ( TGT ) and CVS Health ( CVS ) should hit Allergan’s distribution business to the tune of $500 million a year, and the launch of bowel-disease drug Viberzi has increased spending. Davis wrote that he is nonetheless maintaining his buy rating due to the high likelihood that the deal will close. There has been some skepticism among investors over whether the Pfizer-Allergan deal is going to close this year — besides the signals from Allergan’s falling stock price, a buy-side survey by Evercore ISI analyst Mark Schoenebaum this month found that a fifth of respondents place the odds at less than 50%. Along with the FTC’s backlog, there’s concern that the incoming president and Congress might do something to limit tax-inversion deals like this one, as some candidates have threatened to do. Pfizer’s leadership and Wall Street analysts have been more confident, however. On March 8, Deutsche Bank analyst Gregg Gilbert wrote that the gap between Pfizer’s offer price and Allergan’s stock price — then $47 — presents a buying opportunity as it will likely narrow as the deal closing nears. Allergan stock was down a fraction in morning trading on the stock market today , near 274.