Consumer discretionary, Inc. Logistics Deal With Air Transport Services Praised At Baird

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Baird sees $400 billion opportunity in, Inc’s logistic ambitions as the company announced a deal with Air Transport Service

The announcement that, Inc. (NASDAQ:AMZN) and Air Transport Services are working together has received highly bullish coverage from Baird. Baird analyst Colin Sebastian commented on how the move establishes Amazon’s roadmap of expanding its logistics and how the resultant synergies would create cost saving as well as help Amazon become a logistics company in its own right, adding billions in revenue. Baird had an Outperform rating on Amazon with a $710 price target.

According to Baird, the partnership with Air Transport Services will create an air cargo logistics network for Amazon’s customer base. Baird sees this as an opportunity for Amazon to move beyond the expansion of its fulfillment network and last-mile delivery facilities into the broader logistics business. The partnership with Air Transport Services will add additional capacity to Amazon’s logistics and may create additional opportunities for it to grow its delivery network and improve customer satisfaction. It could also offer the extra capacity to third parties in need of logistic support.

Sebastian noted that the investments into the network would of course impact the company’s margins in the short term but the synergies created from the expansion of their delivery network would save costs as dependency on costlier options like UPS and FedEX would be reduced. The move would also give the company more control over its services and thus their ability to improve customer satisfaction.

Adding transport and logistics as a service would bring Amazon into a lucrative market with Baird estimating as much as $400 billion from Amazon’s logistics services in delivery, freight forwarding and contract logistics with retailers manufacturers and businesses. The move was postulated by the Baird analyst in earlier notes and was reiterated with the new partnership.


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