Amazon (AMZN) Fires on All Cylinders, Cheers Top Analyst

SunTrust's Youssef Squali remains as impressed as ever with Amazon's commitment to customer satisfaction.


Amazon.com, Inc. (NASDAQ:AMZN) just got a bullish vote of confidence from one of the best performing analysts on the Street following CEO Jeff Bezos’ annual letter to shareholders released yesterday. Top analyst Youssef Squali at SunTrust continues to sing the praises of the e-commerce king for both its short-term as well as long-term opportunity. Bezos’ letter listing Amazon’s hallmark wins from last year have Squali that much more upbeat on the stock even in face of President Trump’s recent blasts- and the potential menace of anti-trust regulation.

Believing for now anti-trust threats are “at bay” and highlighting Bezos’ strength in always putting the customer’s satisfaction first, the analyst reiterates a Buy rating on AMZN stock with a $1,600 price target, which implies a close to 3% upside from current levels.

First, Squali pays attention to a homerun in Prime Membership, whose numbers across the globe have outclassed expectations with 100 million members worldwide, even 13 years on back of its first launch. Net adds kept ramping up throughout 2017. Before, the analyst had called for 70 to 80 million, which has left him that much more enthusiastic on Amazon’s powerhouse momentum. Squali forecasts U.S. penetration of Prime circles 50% of households. The AMZN management team gives kudos here to robust demand in India as well as to a successful Prime Day last year. Stellar gains in Prime members looks good for long-term marketplace revenue gains, wagers the analyst.

Second, with relentless attention to prioritizing the customer, Bezos’ “high standards” have landed Amazon in first place in various independent surveys: from the American Customer Satisfaction Index to the UK Customer Satisfaction Index to The Harris Poll Reputation Quotient.

Third, Amazon’s leader pats himself on the back for investment and job creation, investing $150 billion across the world over the last seven years, and creating 1.7 million direct and indirect global jobs in the process. With laser attention paid to small-to-medium businesses (SMBs), the analyst notes this had allowed the AMZN empire to add beyond 300,000 SMBs to the platform in just last year.

Fourth, Amazon is raring to conquer “the next battleground” in India, having shelled out more than $5 billion in investments in this arena. Rival Walmart has meanwhile invested in Instacart, which the analyst anticipates will sustain a “hyper competitive” market that begets more investment and losses in the near-term.

Overall, “In Jeff Bezos’ annual letter to shareholders published today, the CEO goes on to cite many of the company’s impressive achievements throughout 2017, and reiterates his focus on using higher standards to run the company at all levels, and his maniacal focus on customer satisfaction, which is the source of his competitive advantage, in our view. Interestingly, what was not spelled out in the letter directly but permeated it indirectly in our view, is a powerful response to much of the criticism from President Trump and others about Amazon’s reportedly excessive power in commerce and monopolistic behavior, and threats of anti-trust regulation, all of which have weighted down the stock recently. We remain impressed with Amazon’s achievement, and positioning both short- and long-term, and continue to be positive on the stock, with a $1,600 Pt, as we see no imminent or realistic basis for anti-trust moves against the company by the government at this time,” Squali contends.

Youssef Squali has a very good TipRanks score with a 70% success rate and an impressive ranking in the top 100 on Wall Street: #65 out of 4,791 analysts. Squali yields 20.2% in his annual returns. Investors who follow Squali’s recommendation on AMZN will earn a solid 49.4% in average profits on the stock

TipRanks indicates this e-commerce king is one of Wall Street’s favorite bets. Out of 38 analysts polled in the last 3 months, almost all are bullish on AMZN- 37 rate a Buy on the stock while only 1 maintains a Hold. The 12-month average price target stands at $1,707.11, marking nearly 12% in upside potential from where the stock is currently trading.