Today, the Amazon Maven glances at the most recent research reports issued by Wall Street on Amazon stock and quantifies the upside opportunity.
In the last few days, Wall Street has sent a clear message: Amazon stock is a buy. At least this is the opinion of a handful of analysts that have published research reports since the Labor Day holiday.
Today, the Amazon Maven looks at the main arguments made recently. But first is a bird’s eye view of how optimistic sell-side experts have been on the e-commerce giant’s shares.
Wall Street on AMZN: 22% upside
It is well known that bank analysts tend to have a bullish bias on the stocks that they cover. However, when it comes to AMZN, something even more interesting is happening. Of all 32 experts covered by TipRanks, not even one Wall Street analyst thinks that Amazon stock should trade below its current market price of $3,455 apiece.
Still 7% below July’s all-time high, Amazon shares should be worth $4,225, according to Wall Street’s consensus estimates. Should these target levels be achieved, investors that buy AMZN today would realize sizable gains of 22%.
The latest from analysts
About a half dozen reports have been issued on Amazon stock in the past week. Goldman Sachs’ Eric Sheridan has just initiated coverage on AMZN with a buy rating and price target of $4,250, representing 23% upside potential.
According to the analyst, the Seattle-based company should be a beneficiary of the tailwinds in the internet sector. In addition, the company has “exposure to multiple long-term runways that can sustain 15%-plus growth while also producing margin expansion in the coming years”.
Bank of America’s Justin Post went a few layers deeper and pointed out one key growth opportunity: the development of a POS (point-of-sale) system that would allow Amazon to compete with Shopify and others. The analyst stated the following:
“We expect Amazon to offer a feature rich product with deep integration with Amazon’s marketplace, fulfilment, checkout, and payments processing capabilities. […] The opportunity is big, and Amazon’s existing customer relationships provide a foundation to help build adoption.”
Also worth noting, Evercore ISI’s Mark Mahaney bumped his target price by $500 to suggest juicy gains of 36% ahead. Mr. Mahaney was one of the few analysts to accurately predict Amazon’s struggles in Q2 before the company delivered results that, in fact, missed the mark.
The Amazon Maven’s take
We continue to hold the same opinion on Amazon stock that we did a few weeks ago. First, concerns over e-commerce results may have been a bit too short-sighted. The opportunity to buy into Amazon’s long-term growth story while the stock is off its historical peak is still on the table.
Second, Amazon’s trailing P/E in the 60s, while certainly not depressed in absolute terms,remains near the lows relative to historical levels. Look forward, and the 2025 earnings multiple of only around 20 times suggests that AMZN has plenty of room to grow into its valuations.
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