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Amazon (NASDAQ:AMZN) shares just can’t resist creating new all-time highs. After a nearly 8 percent run yesterday, the stock is up another 1.07 percent or $34.17 in the pre-market session today, as of 09:03 a.m. ET. This corresponds to a current share price of $3,231.01, comfortably exceeding the previous record of $3,200 created on the 10th of July.
So, what has spurred this renewed euphoria? Well, Amazon received a street-high stock price target of $3,800 on Monday from two Wall Street heavyweights – Goldman Sachs (NYSE:GS) and Jeffries. The matching nature of these prognostications has only served to enhance the probability of Amazon attaining the designated lofty stock price target, thereby, boosting investor euphoria.
For its part, Jeffries moved its needle on Amazon shares from $3,100 to $3,800, corresponding to an upside potential of 17.61 percent relative to the current price level. Jeffries analyst Brent Thill cited the optimism around the e-commerce giant’s Q2 and Q3 earnings as a major contributing factor for the upgrade. The analyst has raised revenue projections for Amazon above consensus expectations as his industry sources and a multitude of data points allude to consistent outperformance “through June and into July”.
Similarly, Goldman Sachs analyst Heath Terry raised Amazon’s stock price target from $3,000 to $3,800 while maintaining a ‘Conviction Buy’ rating for the shares. Due to an acceleration in e-commerce growth in North America, Terry raised his 2020-2022 revenue estimates for Amazon by an average of 3 percent but kept the EBITDA estimates for the period unchanged, on average, due to the expectations for a greater cash outlay related to the ongoing coronavirus (COVID-19) pandemic. Moreover, according to the analyst, infrastructure-related spending will also act as a dampener on Amazon’s EBITDA as the e-commerce giant tries to keep pace with a boom in online sales as well as the AWS segment.
Amazon is expected to disclose its Q2 2020 earnings on the 30th of July. The consensus revenue estimate is currently pegged at $80.6 billion. Similarly, the consensus EPS expectations currently call for $1.60 in earnings per share.
Bear in mind that it was just a few days ago that Amazon crossed the $3,000 mark for the first time ever. Wall Street analysts, on the whole, have been perennially bullish throughout the ongoing pandemic phase. This makes intuitive sense as the recent trends favoring online shopping and delivery are likely to persist even beyond the pandemic due to the added convenience for the consumers. Moreover, subscriptions for the Amazon Web Service are inherently sticky, allowing analysts to continue to expect healthy growth in the company’s top-line metric. During the zenith of the pandemic-induced lockdowns, Amazon was forced to enhance its e-commerce infrastructure to cope with a deluge of orders. Given the persistent need to maintain social distancing, the company is expected to continue to benefit from the growth in this segment.
Amazon shares have been faithfully traversing an upward trajectory lately, where each incremental elevation seems to provide the footing for the next one. Year to date, the stock is up by a whopping 70.23 percent. This is all the more striking given that the broader S&P 500 index turned positive for the year just recently.
