Jon Hadad

About the Author Jon Hadad

Jon Hadad graduated from the University of Delaware with a degree in political science. Prior to joining the Smarter Analyst team, he was an industry analyst at a New York research firm.

Top Analyst Sees Amazon’s (AMZN) Innovation Powering Stock Higher


Amazon (AMZN) is in the air.

The eCommerce giant continues to turn its sights to logistics, and recently announced a new project: Amazon Prime Air. The company is building drones that will be capable of delivering small packages in as little as 30 minutes, and hopes to be able to do this in a few months. While innovative and newsworthy, the reasons behind the drones is about money and continued commitment to quickness. The company relies heavily on third-party companies like UPS and FedEx to deliver packages, which unreliable at times of high capacity. But using a network of drones, Amazon hopes it could cost-effectively deliver packages in just minutes.

With that in mind, Stifel analyst Scott Devitt maintains his Buy rating on AMZN stock with $2,300 price target, which implies nearly 28% upside from current levels.  

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, analyst Scott Devitt has a yearly average return of 21.3% and a 69% success rate. Devitt has an average return of 30.3.% when recommending AMZN and is ranked #40 out of 5,179 analysts.

This week, at the re:MARS 2019 conference, Amazon has focused on the future of Machine Learning (ML), Automation, Robotics, and Space. Machine learning has been key to Amazon, as it is the force behind the recommendation engine, which Devitt estimates accounts for over 20% of Amazon’s retail sales.

While Devitt says drone delivery was discussed and shown, the analyst credits Amazon’s “meticulous build-out of…infrastructure and capacity planning that make things happen today.” Robotics is a major part of this, with Kiva (an Amazon-acquired company) adding “significantly to the capabilities of Amazon fulfillment.”

More than robotics, Amazon is continuing to invest in infrastructure. The company operates as a third-party logistics provider, with retailers paying for access to Amazon’s massive infrastructure and a customer base increasingly interested in fast delivery (Prime). While Devitt says, “Amazon is gaining share because its products and services are better than others in the market,” the company’s infrastructure is of great importance as many that sell on Amazon’s do not have the infrastructure to deliver across the country.

All in all, the company continues to show off its innovative side, which powers its ability to deliver. And this is among the many reasons analysts love the stock. TipRanks analysis of 36 analyst ratings on the stock shows a Strong Buy consensus, with all 36 analysts recommending Buy. The average price target among these analysts stand at $2,251.21, which implies a 28% upside from current levels. (See AMZN’s price targets and analyst ratings on TipRanks)

 

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