Amazon (AMZN) stock is the gift that keeps on giving — if you’re on the long side that is. For a decade, shorts have tried to circumvent AMZN’s prospects based on profitability metrics, but the stock continued to rise relentlessly.
If you haven’t yet bought AMZN but are considering it, Evercore ISI analyst Anthony Diclemente has good news for you: There’s still time. Based on his research, there’s more upside potential for the e-commerce giant. The analyst reiterates an Outperform rating on AMZN, while lifting his price target to $2,200 (from $2,100), which represents a potential upside of 15% from where the stock is currently trading. (To watch Diclemente’s track record, click here)
Diclemente opined, “According to infrastructure research firm MWPVL, AMZN is set to increase its domestic distribution and fulfillment center footprint by 41mn square feet by 2020 on top of its existing 130mn worth of capacity. While we expect these numbers will get revised higher over time, this estimated 17-20 CAGR of 10% actually is well below the >35% growth that Amazon achieved for its North America e-commerce infrastructure each of the last two year, suggesting cost efficiencies on the margin. When taken in conjunction the company’s recent margin outperformance, we gain a higher degree of confidence in the possibility for upward profitability revisions as we move through 2H18 and into 2019. This confidence in the trajectory of profitability, along with Amazon’s continued strength in India raises our SOTP multiples across the board. In sum, these changes take our target price from $2,100 to $2,200.”
Diclemente is certainly not the first analyst with an optimistic outlook for Amazon. A total of 40 analysts currently provide ratings; 38 of them suggest a Buy, while only 2 recommend a Hold rating. The 12-month consensus mean price target for the stock is $2,181.89, reflecting a 14% upside from current levels. (See AMZN’s price targets and analyst ratings on TipRanks)