Travel retailer Hudson doesn’t have to worry about Amazon Go stores heading to airports, analysts say
Hudson Ltd. HUD, +2.47% a leading travel retailer, doesn’t need to be too concerned about a Reuters report that Amazon.com Inc. AMZN, +0.73% will be adding its cashier-less Go stores to airports, analysts say. According to Reuters, Amazon is "evaluating top U.S. airports for new locations." UBS analysts question whether this is feasible for a few reasons. First, customers might not have access to a credit card or Go account while in transit, which would hinder their ability to make a purchase. Though a small portion of travelers, the "underbanked," those who don’t have a credit or debit card, wouldn’t be able to shop at a Go store. And third, according to UBS, the high cost of Go store technology coupled with fees to airport operators would make building a Go store difficult and expensive for Amazon. "Thus we think the headline risk is bigger than the actual risk for Hudson, at least in the near-term," UBS wrote. Hudson has just under 40% of travel retail market share, UBS says. Analysts rates Hudson stock buy with a $27 price target. Credit Suisse thinks the Go format would be difficult for Amazon to scale, and, moreover, undercutting the high prices that are typical in an airport won’t help to cover operating costs. "[T]he concession fee paid to airports typically is some percent of revenue," Credit Suisse wrote. "In our view, lower prices likely wouldn’t mean more revenue for the whole airport." Credit Suisse rates Hudson shares outperform with a $24 price target. Hudson shares are up 2.8% in Monday trading, but down 17.7% for the last three months. Hudson stock went public in February. The S&P 500 index SPX, +0.18% has dropped 8.6% in the past three months.
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