KeyBanc Pounds the Table on, Inc. (AMZN)

KeyBanc analyst Edward Yruma was out pounding the table on, Inc. (NASDAQ:AMZN), reiterating an Outperform rating and raising the price target to $820 (from $800), which implies an upside of 16% from current levels.

To the company’s credit, the analyst believes that AMZN’s move to: (1) add a dedicated air component to its logistics system and (2) shift holiday surge FBA pricing should help maintain high service levels and fulfillment costs.

Yruma noted, “We were able to identify seven current airframes being used (out of the eventual 40) and mapped the existing route network. Based on our assumptions (see herein) on current Amazon shipping rates from FC to consumer on a traditional carrier, we estimate Amazon can save an average of $5.82 per shipment. On an annualized basis, and assuming 40 planes, this could drive ~$440 million in savings.”

Furthermore, “We believe the move to use USPS injection in 2013 lowered the cost of two-day shipments. Amazon’s move to add air capability between fulfillment and sort centers and additional use of alternative last-mile providers can help alleviate pressure on shipping costs. We are lowering our fulfillment costs/revenue estimates by 3 basis points in 2016 and 22 basis points in 2017, which underpins our $0.05 and $0.43 EPS estimate increases. We model $19.1 billion in 2017 fulfillment costs (ex-SBC).”

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Edward Yruma has a yearly average return of 0.5% and a 46.4% success rate. Yruma has a 6.8% average return when recommending AMZN, and is ranked #1974 out of 3976 analysts.

Out of the 45 analysts polled by TipRanks, 40 rate Amazon stock a Buy, while 5 rate the stock a Hold. With a return potential of 11.8%, the stock’s consensus target price stands at $788.75.

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