Everybody is more than ready for things to get “back to normal,” but the big question making the rounds on Wall Street and Main Street is what will “normal” look like after a once in a hundred years catastrophe is in the rearview mirror? The answer is undoubtedly one of the biggest jump balls in the history of Wall Street and our nation.
In a very impressive look forward, a new research report from the analysts at Jefferies makes the case that one specific paradigm shift in the “new normal” that was thrust upon corporations due to the pandemic and the lock-down across the nation may spark some big change. They feel that corporate America may decide that the work-from-home (WFH) model actually may be incredibly productive, cost-effective and a possible wave of the future.
The Jefferies report cites the numerous positives of the WFH model for not only employers but also for employees. The very comprehensive research report noted this:
5% of US workers WFH full-time. Post COVID-19, the benefits of flexible working will likely lead to a doubling of WFH levels which will drive paradigm shifts in tech requirements, consumer behavior and will provide extra time (removing commutes “gives back” 236 hours annualy to the average WFH employee). Benefits to the employer include: attraction of talent; reduction in real estate and other central costs; productivity gains and potentially lower levels of turnover. Less positive impacts may include reduced innovation (driven by lower human interaction levels). Although working alongside families in un-planned office locations and the absence of work from office days are sub-optimal, our survey suggests that more employees will seek to work from home post the pandemic.
The report also noted that a recent Gartner survey of 327 chief financial officers suggested that three-quarters of respondents intend to have an additional 5% or more of their workers work from home, and 25% of respondents suggested it could be up to 20% of their workforce.
The incredible change and innovation in technology has made this previously unfathomable scenario a potential reality. With currently available superfast internet speeds and latency, smartphones, software and a host of other capabilities that were not even possible or available a short 15 years ago, the transition to the WFH standard is becoming remarkably easy.
The Jefferies report cites numerous companies they feel will be winners (and some possible losers) as the WFH model emerges. Here we focus on the stocks rated Buy they feel will see direct benefits.
This is the absolute leader in online shopping and is on the Merrill Lynch US 1 list of top stock picks. Amazon.com Inc. (NASDAQ: AMZN) serves consumers through retail websites that primarily include merchandise and content purchased for resale from vendors and those offered by third-party sellers. It has one of the most valuable brands in the world.
The company serves developers and enterprises through Amazon Web Services, which provides computing, storage, database, analytics, applications and deployment services that enable virtually various businesses. AWS is also the undisputed leader in the cloud now, and many top analysts see the company expanding and moving up the enterprise information value chain and targeting a larger total addressable market.
The company is also rolling out its checkout-free Go technology in a large grocery store and plans to license the cashierless system to other retailers. Amazon Go Grocery opened in Seattle last month. It uses an array of cameras, shelf sensors and software to allow shoppers to pick up items as varied as organic produce and wine and walk out without stopping to pay or scan merchandise. Accounts are automatically charged through a smartphone app once shoppers leave the store.
The Jefferies $2,300 target price for the shares compares with the Wall Street consensus target of $2,414.22. Amazon.com stock closed trading on Wednesday at $2,307.68.