|Ripple effects from the Amazon/Whole Foods deal:|
Impinj: Amazon Just One More Reason Not To Short It, Says RBC
By Tiernan Ray
June 16, 2017 4:48 p.m. ET
Mitch Steves of RBC Capital surmises Impinj's radio-frequency tags and related technology could get a big lift from Amazon's deal to buy Whole Foods, just one more reason he thinks you shouldn't short Impinj shares despite a 58% run-up this year.
Shares of Impinj ( PI) today closed up $8.94, or over 19%, at $55.71, bolstered by speculation that its technology for radio-frequency identification, or R.F.I.D., tag systems may get a lift from Amazon’s ( AMZN) announced deal to acquire Whole Foods Market ( WFM).
As I mentioned in my prior story, RBC Capital’s Mitch Steves, who has an Outperform rating on shares of Impinj, thinks there may well be a direct connection between Impinj and Amazon, having speculated back in December that Impinj’s technology was being used for Amazon’s “Go” concept stores.
Steves this afternoon followed up with a fresh research note, raising his price target to $59 from $50, and declaring that Impinj is on the “Do not short list,” even though Impinj stock is up 58% this year.
The Whole Food deal could take RFID systems to “scale” deployment, he thinks:
With the acquisition of Whole Foods there is potential for RFID technology to be rolled out at scale. Importantly, we think there are too many catalysts that could send the stock higher including 1) Kaiser; 2) new airlines; and 3) another major grocery store acquisition from Amazon. Net/net: while we do not anticipate a major announcement on July 18-20, we think investors should avoid shorting Impinj stock. Overall, Amazon and Impinj are not incentivized to announce a potential partnership given a pending $13.7B transaction (AMZN/WFM). We are increasing our price target due to higher conviction in step function changes to revenue numbers – new customers.
Steves thinks you don’t want to sell into this rally in Impinj:
With Impinj now up +13% on the news, we think the key takeaway is to avoid a short position. If Impinj announces any new catalyst another step function could occur. Key potential catalysts include: 1) Kaiser announces partnership with Impinj at RAIN Alliance; 2) Amazon and Impinj announce an official partnership; 3) a new airline announces a partnership similar to the Delta announcement - United for example; and 4) bank shots where if Amazon acquires another large grocery store we think it is clear there will be a price reaction from Impinj.