Travel retailer Hudson doesn't need to be worried about Amazon Go stores going to airports, analysts say
Hudson Ltd. HUD, +2.47% a respected travel retailer, doesn’t must be too worried about a Reuters report that Amazon.com Inc. AMZN, +0.73% will undoubtedly be adding its cashier-less Go stores to airports, analysts say. In accordance with Reuters, Amazon is “evaluating top U.S. airports for new locations.” UBS analysts question whether that is feasible for several reasons. First, customers might not get access to credit cards or Go account during transit, which may hinder their capability to create a purchase. Though a little part of travelers, the “underbanked,” those that don’t possess a credit or debit card, wouldn’t manage to shop at a chance store. And third, in accordance with UBS, the high cost of Go store technology in conjunction with fees to airport operators would make creating a Go store difficult and expensive for Amazon. “Thus we think the headline risk is larger than the specific risk for Hudson, at the very least in the near-term,” UBS wrote. Hudson has slightly below 40% of travel retail market share, UBS says. Analysts rates Hudson stock buy with a $27 price target. Credit Suisse thinks the Go format will be problematic for Amazon to scale, and, moreover, undercutting the high prices which are typical within an airport won’t help cover operating costs. “[T]he concession fee paid to airports is some percent of revenue typically,” Credit Suisse wrote. “Inside our view, lower prices likely wouldn’t mean more revenue for your airport.” Credit Suisse rates Hudson shares outperform with a $24 price target. Hudson shares are 2 up.8% in Monday trading, but down 17.7% going back 90 days. Hudson stock went public in February. The S&P 500 index SPX, +0.18% has dropped 8.6% during the past 90 days.
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