Following 2020’s outsized gains, the 2021 stock market has been less of a thrill for Amazon (AMZN) stock. It has been a choppy performance so far, and Amazon stock has dilly dallied in both directions without a conclusive move either way.
In fact, the depressed performance, says Jefferies’ Brett Thill means Amazon stock is now trading at a historically low EV/EBITDA multiple. This presents opportunity, as given the pandemic-led changes in consumer habits which have driven “permanent increase” in e-commerce adoption, Thill argues the stock is underperforming despite a fundamental outlook “that is arguably better than ever.”
It’s a conclusion reached following a recent Jefferies survey on consumers’ spending habits. The survey found that 60% of those questioned were shopping more online since the pandemic’s onset. Even after the easing of restrictions, 63% among those have ramped up their online spending, while only 15% have reduced their online shopping habits.
“Amazon is a clear standout,” the 5-star analyst noted, “With 77% of consumers continuing to spend more on the site since restrictions were lifted, followed by 26% at Walmart, 15% at Target, 15% at Chewy, 10% at eBay, and 9% at Etsy.”
Thill thinks Amazon Prime is behind much of the increased spending. Since Covid hit, 9% of US adults have joined the Prime club, and even when the pandemic fully retreats, ~80% of those expect to keep the service.
But it is not only Amazon’s e-commerce prospects which are looking strong. The company’s highest margin businesses “continue to thrive.”
“AWS and Advertising experienced accelerating Sales growth in 1Q,” said Thill, “Helping AMZN deliver its 4th consecutive quarter of upside to consensus Operating Income.”
AWS - as the “de facto” cloud infrastructure provider - will continue to benefit from the shift to remote working, while for advertising, Thill anticipates “higher post-pandemic share in consumer staples for AMZN driving increased penetration of $1T in combined CPG trade/advertising spend.”
Taking all these factors into consideration, Thill adds AMZN to Jefferies’ Franchise Picks List. The analyst rates the stock a Buy along with a $4,200 price target. The implication for investors? Upside of 20%. (To watch Thill’s track record, click here)
Amazon is one of a select club with a large yet unanimous analyst following. The stock has a Strong Buy consensus rating based on Buys only – 31, in total. The average price target is a touch higher than Thill’s, and at $4,297.58, indicates one-year gains of 23%. (See Amazon stock analysis on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Amazon’s (AMZN) on-demand cloud computing platform, Amazon Web Services (AWS), has been selected as the official cloud, machine learning, and artificial intelligence provider by Ferrari (RACE).
With this deal, Ferrari seeks to take advantage of AWS’ high-performance computing (HPC) technology, which will allow Ferrari to test thousands of car designs. As a result, Ferrari will be able to gather information on car performance under a wide variety of driving conditions and racing scenarios.
Both the companies are also looking forward to speeding up innovation across the entire Ferrari organization, including the road cars department, GT Competitions, the Ferrari Challenge, and the Scuderia Ferrari FORMULA 1 (F1) team. (See Amazon stock chart on TipRanks)
Moreover, for F1 racing fans, the luxury sports car maker seeks to launch a digital fan engagement platform, which will provide fans access to some exclusive content, such as virtual access to the Scuderia Ferrari garage and hospitality suite on race days.
“As our Official Cloud Provider, I firmly believe AWS will enable our company to become a data-driven organization that uses the power of technology to improve our products, increase engagement with Ferrari enthusiasts worldwide, and deliver continuously more exciting driving experiences," said Mattia Binotto, Principal of Scuderia Ferrari.
Matt Garman, Senior Vice President of sales and marketing at Amazon Web Services, commented, "Ferrari can rely on AWS to help them take driving and racing to the next level, while generating fresh excitement among their global community through more personalization and new digital experiences.”
On June 9, Tigress Financial analyst Ivan Feinseth reiterated a Buy rating on Amazon stock with a price target of $4,370. The analyst’s price target implies 25% upside potential.
Feinseth noted, “AWS continues to experience solid revenue growth driven by ongoing new customer wins and increasing enterprise adoption to its powerful, technologically advanced Cloud platform.”
Consensus among analysts is a Strong Buy based on 32 Buys. The Amazon average analyst price target of $4,297.58 implies 23% upside potential to current levels.
AMZN scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
Related News:
Adobe Delivers Impressive Q2 Results; Shares Rise 3% After-Hours
JPMorgan to Acquire Nutmeg in U.K. Retail Expansion
BlackRock to Snap Up Baringa Partners’ Climate Change Scenario Model