Amazon.com, Inc. (NASDAQ:AMZN) stock was off and running early Monday morning after another firm increased its price target. It seems like analysts are starting their bidding war on Amazon stock early, as this latest increase puts one firm’s price target at $1,410—mere days after another firm set its target at $1,400.
Amazon stock price target at $1,410
Credit Suisse analysts Stephen Ju boosted his price target for Amazon stock from $1,385 to $1,410 in a note to investors on Monday. He also offered up a preview of the online retailer’s fourth-quarter earnings report, even though no firm release date has been announced yet.
Ju now estimates Amazon’s fiscal 2018 earnings per share at $15.87, up from $15.69 per share. His new price target for Amazon stock is derived from that higher estimate, which comes from an increase in non-Prime subscription revenue and a decrease in capital expenditures for the e-commerce segment.
In a note last week, Citi analysts boosted their price target for Amazon stock to $1,400, CNBC reported. They cited a bullish view of the consumer Internet sector and an expectation that a positive business climate fueled by tax reform will benefit the end markets covered by companies in their coverage universe. Citi also made Amazon stock their top-ranked pick.
Amazon seeks to capture difficult verticals
Ju also said that his firm’s checks indicate that Amazon’s Prime Now service expanded into six more zip codes within the last quarter. He believes this indicates how the company “will continue to accrue wall share.” He explained that Prime Now and Prime Wardrobe are both examples of “product innovations designed to decrease friction against the online transaction.”
His firm’s outlook of the retail sector pointed to e-commerce growth depending on verticals in which it is more difficult to convince shoppers to buy online. Ju explained that product innovation such as Amazon’s Prime Now and Prime Wardrobe will be needed in order to capture wallet share in such verticals.
Amazon’s acquisition of Whole Foods could also have been aimed at capturing difficult verticals because it gave the company brick-and-mortar locations literally overnight. Customers could shop at their local Whole Foods stores and then possibly be convinced to order things from Amazon directly in the future.
Could Spectre pose a threat to Amazon stock?
Last week news about the Meltdown and Spectre vulnerabilities rocked Intel stock, although gradually it became clear that it wasn’t just Intel that would have to deal with the fallout. Tech companies have been quick to roll out patches to their products, but some consumers may find out that these patches have noticeably slowed their devices.
Spectre in particular is believed to be a widespread threat because it affects mobile devices and is more troublesome to patch. The Verge noted that Spectre could pose a problem even for Amazon because of its strong presence in the cloud space. An expert at Juniper Networks warned that the vulnerabilities could theoretically make it possible for one user of Amazon Web Services (or any other cloud service) to see into the content owned by another user.
Although no exploits of Meltdown or Spectre have been proven yet, it’s probably only a matter of time before one is reported. The moment The Register revealed these vulnerabilities, the cloud began ticking on exploits.
Amazon Web Services is one of the company’s highest-margin businesses, so it would seem like Amazon stock could face some risk from Meltdown and Spectre. However, this is a problem that impacts not only AWS but every other cloud service provider that exists, so it’s hard to fathom where enterprise customers would flee to if AWS is ever compromised. Microsoft’s Azure could be a strong contender, but customers would have to be extremely certain that switching would be beneficial.
Enterprises can’t switch cloud service providers overnight, as migrating everything to a new platform would take some time. Because all platforms face the same risks from Meltdown and Spectre, it’s not as if customers could just switch to a competing service to escape the risks. Nonetheless, this is still a risk that many investors might not be factoring into Amazon stock, as InvestorPlace pointed out.
Amazon stock surged to a new record high of $1,253.08 in intraday trading on Monday.
