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Amazon to Deliver Enhanced Smart Home Experience With eero

Zacks Equity Research

Amazon AMZN has entered into a definitive agreement to acquire eero in order to foray into home router space.

Notably, eero is a startup best known for its home mesh WiFi systems that utilize multiple access points to connect every room of a house with secured and reliable WiFi in order to deliver high-performing internet connectivity in every room.

Further, the users can customize the set-up according to need, program parental controls and share their network with the help of eero app.

We believe Amazon is likely to deliver enhanced smart home experience to the customers with the aid of self-updating, self-fixing and self-improving eero system.

Competition Likely to Intensify

Increasing internet usage penetration globally along with growing proliferation of connected and smart home devices will continue to drive the demand for home internet routers.

Per a report from Transparency Market Research, the global market for home routers and extenders are anticipated to witness a CAGR of 6.6% between 2018 and 2026 to reach $129.6 billion by 2026.

In fact, the growth opportunities are attractive enough to lure other players to foray in this particular market. Notably, the search giant, Alphabet’s GOOGL Google has already entered this market in late 2016 with Google Wifi which is similar to eero’s home WiFi product.

Consequently, the latest move of Amazon is likely to provide a strong competition to Google. Moreover, with the user friendly eero home mesh WiFi system, Amazon is expected to fast penetrate the home router market.

Amazon.com, Inc. Price and Consensus


Amazon.com, Inc. Price and Consensus | Amazon.com, Inc. Quote

Expanding Smart Home Product Portfolio

The latest acquisition agreement of Amazon bodes well for its strong focus toward expanding its smart home products portfolio.

Notably, the portfolio already contains several products such as Echo smart speaker, voice-controlled microwave, Fire TV and Key by Amazon product lines, to name a few.

Further, the company also added smart video doorbell and home security camera to its portfolio by acquiring companies called Ring and Blink, respectively.

We believe the company will continue to reap benefits from the potential smart home market with the help of its strengthening smart home product offerings.

Zacks Rank & Stocks to Consider

Currently, Amazon carries a Zacks Ranks #3 (Hold).

Some better-ranked stocks that can be considered in the retail-wholesale sector are TripAdvisor TRIP and Groupon GRPN. While TripAdvisor sports a Zacks Rank #1 (Strong Buy), Groupon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long term earnings growth rate for TripAdvisor and Groupon is currently pegged at 14.05% and 3%, respectively.

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