Wedbush trimmed its price target on Instacart to $42 from $55, noting that consumers will opt for value-driven services.
Instacart (CART) stock received a rating change from Wedbush, with the firm downgrading it to ‘Underperform’ from ‘Neutral’, as it noted that Amazon’s (AMZN) expansion of its same-day perishable grocery delivery service has intensified competition in the segment.
Retail sentiment on Instacart remained unchanged in the ‘bearish’ territory, with chatter at ‘high’ levels, according to data from Stocktwits. Shares of the company were down over 3% in early trading.
Wedbush also trimmed its price target on Instacart to $42 from $55, according to TheFly. The firm stated that consumers will opt for value-driven services. It noted that Instacart management must navigate this new dynamic to protect market share, which it expects to erode over time as Amazon and others compete more closely.
Prime has become “even more compelling” for grocery shoppers, diminishing the appeal of Instacart, Wedbush said. Last week, Amazon.com (AMZN) announced that its prime members could now shop for perishable products such as groceries, including meat and seafood, along with other items for same-day fast delivery.
Amazon added that customers in more than 1,000 cities and towns in the United States would have access to buy fresh groceries through the same-day delivery option on orders over $25 for Prime members, with plans to reach over 2,300 cities by year-end.
Last week, Morgan Stanley highlighted that Instacart faces intensifying competition in online grocery from more scaled and diversified peers.
Instacart shares have gained over 6% so far this year and surged 27% in the last 12 months.
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