RBC Capital top analyst Mark Mahaney provides perspective on Amazon.com, Inc. (NASDAQ:AMZN) on back of analysis of the 4th Annual Online Customer Survey covering U.S., Germany, and Japan, with special attention paid to the Alexa/Echo Platform.
Mahaney asserts, “Rolling forward the valuation framework; AMZN’s fundamentals have NEVER been stronger in our view,” and as such, reiterates an Outperform rating on shares of AMZN while lifting the price target from $840 to $1,000.
In light of the U.S. consumer survey, Mahaney notes that “faster flywheels” are indicated, with the online streaming giant “stretching its lead,” considering 89% of customers chose Amazon when asked which Online Retail site they use the most.
Moreover, Mahaney sees “purchase frequency rising” and that “satisfaction remains high” for the giant, as a steep 85% expressed satisfaction ranking “extremely” or “very” high, which as a result converts to a boost in purchase frequency.
The survey also reveals U.S. Prime adoption jumped to 49% for year-over-year, with subscriptions circling 60MM, and on a global level hitting 100MM. Mahaney observes that as Prime members become increasingly loyal, the “flywheel [spins] faster,” with 76% noting they now use AMZN more present-day than when they initially joined.
Furthermore, the analyst commends Prime flywheels for “spinning internationally” with “Amazon dominant in Germany” at a first place ranking and “solid in Japan” in second place. Mahaney recognizes that though both satisfaction and purchase frequency are “intrinsically high in Germany” at 90% satisfaction levels, they dip to a “less robust” 37% in Japan, which also means lower purchase frequency. Even though Germany and Japan both lag behind the U.S., Mahaney recognizes both show “significant Prime penetration” as well as flywheels, as the trend of using Amazon more now than when consumers first joined Prime continues abroad.
The analyst concludes with comments on a new potential Pillar candidate, expressing, “We’re now introducing a 7th, Alexa, Amazon’s AI-based Voice Assistant platform. Our survey indicates rising awareness and device ownership among Amazon customers (33% aware; 6% ownership– implying 7MM total Alexa devices sold). And 3rd party apps/skills has tripled since June to 3,000. Alexa may also be stimulating incremental demand (26% of Alexa-device owners use Alexa to purchase items from Amazon “Very” or “Somewhat Often.”) A potential 4th Pillar, indeed!”
According to TipRanks, top five-star analyst Mark Mahaney has achieved a high ranking of #6 out of 4,158 analysts. Mahaney upholds a 67% success rate and garners 20.8% in his annual returns. When recommending AMZN, Mahaney yields 38.3% in average profits on the stock.
TipRanks analytics exhibit AMZN as a Strong Buy. Based on 32 analysts polled in the last 3 months, 30 rate a Buy on AMZN, while 2 maintain a Hold. The 12-month price target stands at $886.67, marking a 15% upside from where the shares last closed.