This is How Much Higher Postal Fees Will Cost Amazon

According to estimates from Credit Suisse, a proposed hike in shipping and mailing fees at the U.S. Postal Service will cost Amazon more than $1 billion next year.

Credit Suisse analyst Stephen Ju reiterated an “outperform” rating on Amazon with a price target increase from $2,100 to $2,400. He did however cut his 2019 pro forma earnings per share estimate by nearly 19 percent to $34.99 citing potential increase in carrier costs, rising labor expenses as a result of Amazon’s minimum wage increase and moderating shipping.

“As we roll forward the sensitivity analysis to 2019, we arrive at a potential incremental Shipping Expense range of $400 million to $1.1 billion range with the assumption that 40 percent to 50 percent of U.S. packages are shipped via the Postal Service,” Ju wrote.

“Starting in the second half of 2016, Amazon started to report a meaningful increase in capital expenditures primarily for robotics in its U.S., Europe, and Japan-based fulfillment centers,” Ju also wrote. “This should over time allow Amazon to demonstrate greater leverage and offset the aforementioned minimum wage hikes.”

It was on October 10th that the Postal Service said it had filed a notice with the Postal Regulatory Commission of proposed price changes to take effect Jan. 27, 2019, if approved.

Disclaimer: We have no position in Amazon.com, Inc. (NASDAQ: AMZN) and have not been compensated for this article.