For many investors, Amazon (AMZN) is not only the “now,” but the future. Not only is it the largest e-commerce retailer in the country (and e-commerce is expected to only go up from here), the company has a massive delivery network, continues to be a leader in logistics technology and robotics, and runs the leading cloud computing platform. In the next five years, investors expect to see the company continue to grow its presence, while improving its margins as technology contributes to lower operating and delivery expenses. And of course, the company continues to branch out of the US, with foreign revenue and profit expected to increase in time.
International expansion is one of the primary reasons top analyst Mark Mahaney maintains his Outperform rating on Amazon stock, with a price target of $2,250.
As always, we like to give credit where credit is due. According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, Mahaney has a yearly average return of 23.2% and a 64% success rate. Mahaney is ranked #43 out of 5,247 analysts.
Looking ahead to 2023, Mahaney thinks a main catalyst of growth will be Amazon’s expansion in the international market. He specifically looks at “The Five” — India, Brazil, Mexico, Australia, and Turkey. The analyst believes there is a “$25B revenue opportunity across The Five,” by 2023, with the majority of revenue coming from India (up to $18 billion), with Australia and Mexico is expected to combine for 4% of sales by 2023.
But aside from international expansion, Mahaney expects new revenue opportunities to propel the stock forward. The analyst says “prospects include consumer staples, apparel…Amazon Web Services, digital media offerings, office/ industrial supplies, and advertising.” Advertising continues to be a growing segment, as many are using Amazon as a search engine for products, with Amazon placing sponsored results, the way Google does.
Of course, the main propeller of Amazon growth will be the services it offers customers. Recently, Amazon announced it would make Prime — which pioneered two-day shipping — even more appealing, by replacing two-day shipping with one-day. The aforementioned Advertising, as well as Web Services, helps Amazon undercut the competition these high-profit segments help cover costs for retail.
All in all, Amazon’s hold on the ever-growing e-commerce retail segment, as well as cloud computing, makes it one of Wall Street’s favorite stocks for now. TipRanks analysis of 30 analyst ratings on the stock shows a Strong Buy consensus, with all 30 analysts recommending Buy. The average price target among these analysts stands at $2,283.75, marking nearly 30% upside from current levels. (See AMZN’s price targets and analyst ratings on TipRanks)