Analysts weighed in on on e-commerce giant Amazon.com, Inc. (NASDAQ:AMZN) and enterprise software maker International Business Machines Corp. (NYSE:IBM), with positive ratings. While one analyst highlights a few reasons to buy Amazon stock, the other reflects on IBM’s acquisition of Truven Health Analytics. Let’s take a closer look.
In a research report issued yesterday, Canaccord analyst Michael Graham upgraded shares of Amazon from a Hold to a Buy rating, with a price target of $750, which implies an upside of 43% from current levels.
Graham explained, “We regrettably missed last year’s big move in AMZN stock. While we were confident in top-line growth prospects, we were concerned that margins would expand more slowly than consensus expected. This view was marginally vindicated by Amazon’s Q4 report, wherein the company guided for a slower margin ramp. This, combined with general market weakness, has caused the stock to drop ~25% since the start of the year. We are therefore taking this opportunity to upgrade the stock and re-join the majority which we believe is correct in this instance.”
The analyst highlighted six reasons to buy Amazon stock:
- Core eCommerce business should continue to benefit from secular shifts.
- Audience & fulfillment scale should lead to continued share gains.
- WS is an important tailwind to growth, margins, and valuation.
- Scale-based incubation dynamic should extend the period of high growth.
- Estimate revisions may be mixed, but investors are conditioned for lumpy margin expansion.
- Stock is down by ~25%, and the valuation is as reasonable as it has been in years.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Graham has a yearly average return of 4.3% and a 48% success rate. Graham is ranked #468 out of 3640 analysts.
Drexel Hamilton analyst Brian White reiterated a Buy rating on shares of IBM, with a price target of $160, after the company announced plans to acquire Truven Health Analytics for $2.6 billion in cash and a closing date later this year.
White wrote, “In our view, the technology solutions that support data collection and analysis across the healthcare industry have major room for improvement, representing a big opportunity for IBM.” He continued, “Over time, Truven will be integrated into the Watson Health Cloud. With Truven’s data sets around claims, quality, outcomes and cost, IBM plans to develop new insights for a wide array of health-related decisions.”
According to TipRanks.com, analyst Brian White has a yearly average return of 5.6% and a 48% success rate. White has a -13.9% average return when recommending IBM, and is ranked #283 out of 3640 analysts.
Out of the 11 analysts polled by TipRanks, 3 rate IBM stock a Buy, 5 rate the stock a Hold and 3 recommend a Sell. With a return potential of 0.27%, the stock’s consensus target price stands at $131.73.