Street Check: Analyst made prescient call on Blue Apron ahead of Amazon report

The shares of Blue Apron (APRN) are sliding following a media report saying Amazon (AMZN) has filed a trademark that makes it appear the e-commerce giant is getting into the meal kit business. In a note to investors last week, Northcoast analyst Chuck Cerankosky initiated coverage of the recently public Blue Apron with a Sell rating, saying he sees the company facing considerable competition. The Fly published a summary of Northcoast's note on the day it was circulated. MEAL KIT BUSINESS: Amazon has filed a trademark to get into the meal kit business, according to a report by TheStreet. Amazon Technologies revealed in the July 6 trademark application that it is planning "prepared food kits composed of meat, poultry, fish, seafood, fruit and/or and vegetables...ready for cooking and assembly as a meal," as well as primarily grain-based offerings. SELL BLUE APRON: In a research note to investor on July 11, Northcoast's Cerankosky started Blue Apron with a Sell rating and a $2 price target. While he pointed out that Blue Apron produces and markets "high-quality, convenience-oriented fresh food" in the form of recipe-ready meal kits, the company faces considerable competition, not the least of which is the emerging focus at certain conventional supermarkets to sell meal kits. Blue Apron is not a technology company just because orders are received digitally, Cerankosky noted, adding that the company's cost structure has a very high labor content due to the need to hand assemble various food ingredients for each order into boxes that include ice packs, alongside shipping costs. PRICE ACTION: In morning trading, shares of Blue Apron have dropped about 9% to $6.72. Blue Apron, which made its initial public offering June 29 on the New York Stock Exchange, opened at $10 per share and closed at $10.02 on that day.