The page you are looking for is temporarily unavailable.
Please try again later

Money Wall Street is bailing on its one-time retail darling Costco after Amazon’s deal for Whole Foods

17:27  19 june  2017
17:27  19 june  2017 Source:   cnbc.com

Amazon to buy upmarket grocer Whole Foods for $13.7 billion

  Amazon to buy upmarket grocer Whole Foods for $13.7 billion <p>Amazon.com Inc said on Friday it would buy U.S. organic supermarket chain Whole Foods Market Inc for $13.7 billion, including debt.</p>WFM

Wall Street is increasingly worried about Amazon ' s threat to Costco after the e-commerce giant's .7 billion deal to buy Whole Foods Market. Costco shares fell 7 percent Friday on the news. And now one trading day after Goldman Sachs downgraded Costco , another bank is following suit.

Wall Street is increasingly worried about Amazon ’ s threat to Costco after the e-commerce giant’s .7 billion deal to buy Whole Foods Market . Costco shares fell 7 percent Friday on the news.

  Wall Street is bailing on its one-time retail darling Costco after Amazon’s deal for Whole Foods © Provided by CNBC Wall Street is increasingly worried over Amazon's (AMZN) threat to Costco (COST) after the e-commerce giant's $13.7 billion deal to buy Whole Foods Market (WFM).

Costco shares fell 7 percent Friday on the news.

And now one trading day after Goldman Sachs downgraded Costco, another bank is following suit.

Deutsche Bank lowered its rating for Costco to hold from buy Monday, saying the competitive advantage from its food business is at risk due to Amazon.

"The WFM acquisition represents a game changer with COST's competitive moat in grocery under greater threat while its digital platform lags peers, putting membership renewal at risk for decline," analyst Paul Trussell wrote in a note to clients Monday. "The pipeline of positive catalysts has played out and the competitive backdrop is intensifying with AMZN & WMT accelerating in-store and online efforts and innovation."

The analyst reduced his price target for the company to $172 from $187, representing just 3 percent upside from the Friday's close.

Canadian dollar strengthens with oil price, yield spreads narrow

  Canadian dollar strengthens with oil price, yield spreads narrow The Canadian dollar strengthened on Friday against its U.S. counterpart as oil prices rose, while the gap between Canadian and U.S. bond yields narrowed further.RY.PR.

Wall Street is increasingly worried about Amazon ' s (NASDAQ: AMZN) threat to Costco (NASDAQ: COST) after the e-commerce giant's .7 billion deal to buy Whole Foods Market (NASDAQ: WFM).

Wall Street is bailing on its one - time retail darling Costco after Amazon ’ s deal for Whole Foods . While many retailers are having a hard time growing foot traffic at brick-and-mortar locations, Ulta is bucking the trends.

Quotes in the article

Costco Wholesale Corp

COST

Amazon to buy Whole Foods for $13.7 billion

  Amazon to buy Whole Foods for $13.7 billion The online retailer is stepping into the physical retail world in a big, big way.The online retailer, which has spent the last few years toying around with experimental physical stores, said it has agreed to acquire Whole Foods Market for $13.7 billion, or $42 a share. The companies expect the deal to close in the second half of the year.

Wall Street is bailing on its one - time retail darling Costco after Amazon ' s deal for Whole Foods 11:56 AM ET Mon, 19 June 2017 | 00:54.

Amazon ' s purchase of Whole Foods put a highly discussed dent in all the retail grocery stocks, of which Costco is perhaps the most highly regarded. It ' s probably an overreaction, but time will tell.

163.96
-3.16
-1.89%
Amazon.com Inc

AMZN

999.94
+12.97
+1.31%
Whole Foods Market Inc

WFM

43.33
+0.63
+1.48%

After the downgrade, seven analysts recommend buying Costco shares and now five have a hold rating. Zero analysts have a sell rating yet.

Costco shares enjoyed the support of Wall Street as its stock climbed more than 80 percent the last five years, much more than most other retail stocks. The low-price warehouse club bred loyalty that trumped the online competition facing the industry. Now analysts believe that may not be enough as this new threat emerges.

Trussell noted that many of the positive catalysts for Costco are now in the past, including the profitability gain from switching to Citibank's Visa credit card, the announcement of its special dividend and its quarterly dividend increase to 50 cents from 45 cents.

On the flip side, not everyone on Wall Street is jumping ship. Cowen reiterated its outperform rating and $190 price target for the retailer Monday, saying Costco will survive Amazon's onslaught.

"Our take is that simple competitive advantages form a defensive moat, for now, vs. AMZN Prime's unstoppable rise," Cowen analyst Oliver Chen wrote in the report. "We believe COST's vertical integration capabilities, low price leadership given a fixed low merchandise margin model, & gas and organic food penetration are factors which will drive continued consistency in the generation of positive physical store traffic."

Costco did not immediately respond to a request for comment for this story.

— CNBC's Michael Bloom contributed to this story.

Canes' Ryan, Darling engage in hilarious jersey negotiation on Twitter .
The Carolina Hurricanes agreed to a new contract with center Derek Ryan on Monday, confirming that Ryan will wear No. 33 in Raleigh for at least another year.&nbsp;Only problem is, newly acquired netminder Scott Darling also has his eyes on double threes.

—   Share news in the SOC. Networks
This is interesting!