After glancing at the Amazon.com, Inc. (NASDAQ:AMZN) crystal ball a.k.a. top analyst Michael Olson at Piper Jaffray delved into his Amazon Search Index, the analyst has come to a bullish conclusion: the online auction and e-commerce leader’s unit growth is looking robust for the third quarter of this year.
With analysis of Google trends search data available thus far showing a rise in search interest compared to last quarter and investors keyed into the company’s profit and loss investments, the analyst reiterates an Overweight rating on AMZN stock with a price target of $1,200, which represents a close to 20% increase from current levels.
Pinpointing the meat of Amazon’s story as one circling its compelling growth prospects, Olson contends: “Our Amazon Search Index indicates Q3’17 unit growth will be 28%, in line with the Street and a slight acceleration from 27% in Q2’17. Additionally, Amazon’s revenue will include ~ $1.4B of WFM revenue (+4% vs. Q3 guidance midpoint) for the month of September. We believe that Amazon is well-positioned to beat Q3 margins ex WFM, but Q4’17 margins remain a wild-card as Amazon has now added another massive project (WFM) that could prevent meaningful margin expansion in Q4 and 1H’18. Having said that, we believe investors are broadly in favor of Amazon’s P&L investments and are coming to understand Amazon’s reported margin is likely a fraction of its “core” margin (we est. ~7% retail margin vs. reported 1% in 2016). Therefore, we believe the dominating narrative will revolve around Amazon’s growth, in which we remain highly confident.”
Michael Olson has a very good TipRanks score with a 69% success rate and a high ranking of #54 out of 4,697 analysts. Olson garners 19.1% in his annual returns. When recommending AMZN, Olson yields 11.0% in average profits on the stock.
TipRanks analytics showcase AMZN as a Strong Buy. Based on 32 analysts polled by TipRanks in the last 3 months, 30 rate a Buy on Amazon stock while 2 maintain a Hold. The 12-month average price target stands at $1,198.93, marking a 19% upside from where the stock is currently trading.