January 29, 2019 / 2:04 PM / 6 months ago

BUZZ-Amazon shipping: Analyst says better to buy than build, eyes FedEx, UPS

** “Buying” is a much more attractive option than “building” if Amazon.com is serious about getting into transport business, Loop Capital analyst Anthony Chukumba says

** Chukumba thinks Amazon’s ultimate distribution goals are limited, but aims to reduce its reliance on and provide leverage with incumbent shippers such as UPS and FedEx

** FedEx and UPS have downplayed the risks, Chukumba notes; adds the shippers are on a “slippery slope” that may lead to price wars if Amazon continues to expand

** Of the two, Chukumba says FedEx is inexpensive at 10.6x forward P/E and 6.5x EV/EBITDA multiples

** A deal would see Amazon get “the best global network for a fraction of the cost of building it themselves,” a point FedEx CEO made recently at a meeting, Chukumba says

** The analyst has a “buy” rating on all three stocks

** YTD, AMZN up ~9 pct, FDX ~8 pct and UPS ~3 pct

** AMZN jumped ~28 pct in 2018, while UPS fell ~18 pct and FDX slid ~35 pct (Reporting by Savio D’Souza in Bengaluru)

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