COVID-19’s disruption won’t impact Amazon’s (AMZN) “leading position in e-commerce and cloud services,” so claims Tigress Financial’s Ivan Feinseth.
It is hard to argue. If any company has proven its resilience in the face of the global pandemic, it is the e-commerce giant. Amazon shares are up by 17% year-to-date, compared to the S&P’s 15% drop.
Amazon’s product portfolio is so wide and all-encompassing that according to Feinseth, its business performance will only accelerate over the near and long term.
Where to start? Never mind the fact COVID-19 has driven consumers to further rely on Amazon’s delivery services, the list of growth drivers makes for an increasingly long read.
Take, for example, Amazon’s voice service Alexa. Amazon has over 70% market share in the voice home control technology market with “hundreds of millions of Alexa enabled devices that customers interact with billions of times a day.” Alexa’s features are constantly upgraded with new capabilities added on a regular basis.
Or AWS (Amazon Web Services). As Feinseth notes, “with $35 billion in revenue over the NTM and greater margins than many of its other business lines,” it is the world’s largest cloud provider, with a client list including “many of the world’s leading companies.” The imminent rollout of 5G networks should further drive adoption of cloud services, which along with the expanding reach of edge computing will “drive further AWS growth.”
What about healthcare initiatives? Amazon bought internet pharmacy PillPack in 2018, and last year rebranded it to PillPack by Amazon Pharmacy. Amazon plans to move “beyond the mail delivery of prepackaged medications into fulfilling prescriptions for acute medical needs.” The retail prescription drug business is one worth more than $300 billion a year, providing another significant growth opportunity.
With a strong balance sheet and cash flows which continue “to fund ongoing innovation and key growth initiatives,” The 5-star analyst need no more convincing. Feinseth concludes, “AMZN’s industry-leading position and innovative ability will continue to drive an increasing Return on Capital, as well as growing Economic Profit that will continue to lead to greater shareholder value creation. I believe significant upside exists from current levels and continue to recommend purchase.”
Accordingly, Feinseth reiterated a Buy rating on Amazon shares but did not set a price target. (To watch Feinseth’s track record, click here)
The rest of the Street is hardly less effusive. The analyst consensus rates Amazon a Strong Buy based on 38 Buys and 1 Hold rating. The average price target is $2,433 and suggests possible upside of 12%. (See Amazon stock analysis on TipRanks)