Amazon.com Inc. will buy Target Corp. in 2018 according to influential tech analyst Gene Munster.
The co-founder of Loup Venture made 8 predictions about the tech industry for 2018 in his latest report. The most highlighted prediction was the one about e-commerce giant Amazon that is expected to buy Target, the second-largest discount retail store in the U.S.
Amazon has already set foot in physical retailing by acquiring Whole Foods for $13.7 billion, last year. According to Munster, the internet giant will make a bigger move in 2018 by acquiring Target Corporation.
“As for retail stores, Amazon’s acquisition of Whole Foods 470 stores along with testing of the Amazon Go retail concept is evidence that Amazon see’s the future of retail as a combination of mostly online and some offline,” he wrote.
He believes that both the companies could be ideal partners due to their somewhat similar approach and their focus on mothers and families. “Amazon believes the future of retail is a mix of mostly online and some offline. Target is the ideal offline partner for Amazon for two reasons, shared demographic and manageable but comprehensive store count,” Munster wrote in a post on Monday.
“As for the demographic, Target’s focus on mom’s is central to Amazon’s approach to win wallet share.”
Walmart is the largest retailer in the U.S. with 12,000 stores. Amazon’s acquisition of Target will increase its store count to 2,300, giving it a better chance to compete with Walmart, according to the analyst.
Gene Munster had worked as an influential technology analyst at Piper Jaffray for 21 years, where he was famous for his accurate predictions regarding Apple Inc’s financial potential. In early 2017, he co-founded venture capital firm Loup, focused on artificial intelligence and virtual reality.
Munster estimated a $41 billion valuation or a 15% premium to Target’s current value.
Targets shares rose to 3.6 percent on Tuesday. Both the companies have refused to speak about the prediction
Predictions related to Amazon’s future deals have always been analyst’s favorite theme. DA Davidson analyst Tom Forte wrote in November that the company might be attracted to Lululemon Athletica Inc., while Citigroup’s Paul Lejuez listed a number of other potential targets. Last month Ken Leon, an analyst from CFRA bank predicted that Amazon might buy a small or mid-sized bank in 2018.