Amazon’s grocery expansion should be large growth opportunity, Evercore ISI says

Evercore ISI notes Amazon (AMZN) announced its expansion of Same-Day Delivery service to include perishable groceries marking a significant strategic move into one of retail’s most competitive and high-retention categories. The firm believes this deepens Amazon’s customer engagement by strengthening a high-frequency purchase category into the Prime ecosystem, increasing stickiness and customer lifetime value. The deeper integration of groceries with Amazon’s vast general merchandise offering positions the company more aggressively against competitors like Instacart (CART), Walmart+ (WMT). By setting a relatively low free delivery threshold of $25, Amazon applies pricing pressure that may challenge rivals’ ability to compete on convenience and cost. Given that this segment is a $1T-plus market in the U.S. and perhaps $2T-plus across all of Amazon’s global markets, there should be a large growth opportunity here, Evercore adds. The firm has an Outperform rating on Amazon with a price target of $280 on the shares.