Amazon.com, Inc. (NASDAQ:AMZN) is again in President Trump’s crosshairs as he emphasized that the company must start paying sales tax to level the playing field with brick-and-mortar retailers, which do. However, investors shrugged off his commentary, and some analysts suggested that his comment was only noise rather than a real threat. The online retailer’s next earnings report is still weeks away, but it seems there’s another price target increase for Amazon stock on a daily basis these days.
Amazon stock price target lifted by Stifel
Stifel analyst Scott Devitt is the latest to increase his price target for Amazon stock, boosting it to $1,425 from his previous target of $1,313 as he reiterated his Buy rating. Stifel put out several reports focusing on different aspects of the online retailer on Thursday, including a preview of the company’s fourth-quarter earnings results. The company hasn’t yet announced when it will post those results, but analysts generally expect them in early February.
E-commerce is expected to be the start of the show because of the healthy holiday shopping season. Devitt is expecting $60.3 billion, marking a 28% year-over-year increase excluding any benefit from the Whole Foods acquisition. Consensus currently stands at $59.7 billion, and the guided range from Amazon management topped off at $60.5 billion. Devitt is looking for $4.9 billion in Amazon Web Services revenue, a 39% increase.
He expects further investments in logistics, video, grocery and Prime to weigh on Amazon’s margin expansion. In addition to these investment areas, he expects Amazon management to focus on their Whole Foods strategy on the earnings call.
Amazon stock is one of JPMorgan’s “best ideas”
JPMorgan analyst Doug Anmuth also boosted his price target for Amazon stock this week, although he declined to join the $1,400 club as a growing number of analysts have raised their price targets to $1,400 and beyond. Anmuth’s new price target for Amazon stock is $1,385, only a slight increase from his previous target of $1,375. In addition to being at $1,400 and above, the other price target increases we’ve seen for Amazon stock recently have been significant in size.
Anmuth has named Amazon stock one of his “best ideas” for 2018. He lumped the online retailer in with Facebook, Twitter, Yelp and Priceline. He thinks Amazon could become a $1 trillion company eventually because he feels it’s still early in the secular shift to online shopping and the cloud. He believes the company is investing more in big growth opportunities than any of the other companies in his coverage universe.
He notes that Amazon stock surged 56% last year, outperforming all of the other FANG names as Netflix stock climbed 55%, Facebook stock rose 53%, and Alphabet stock jumped 33%. According to Devitt, Amazon stock was driven higher by upward revisions to revenue estimates and expansion in its multiple. Meanwhile, earnings estimates fell by about 35% to 50%, he added.
Why Amazon stock could outperform in 2018
He expects this year to bring improved margin flow-through as the company continues to shift to third-party sales and Amazon Web Services and advertising continue to add to profits. However, he also sees margins as the greatest risk for Amazon stock as the company continues to invest heavily while consensus is looking for about 90 basis points of expansion.
Devitt also expects the company to continue growing its Prime subscriber base and expand into new markets. He estimates about 95 million global subscribers, of which 45 million to 50 million are domestic. He also expects AWS to continue holding its roughly 75% share of the cloud market as revenue growth decelerates only modestly.
Amazon stock rose by more than 1% in intraday trading on Thursday, climbing to yet another record high of $1,269.51.