Thursday, April 30, 2020

Amazon (AMZN) Stock Is a Winner, How Much Higher Can It Go?

While the main market indexes are all down roughly 10% year-to-date, Amazon (AMZN) stock is up a whopping 30%. To anyone listening to economic trends amid this coronavirus pandemic, this could come as no surprise. More consumers than ever are staying reception , and successively e-commerce sales have skyrocketed.

Ahead of the Q1 earnings call this afternoon, Bezos & Co. appear to be well-positioned for solid results. Key areas of focus for shareholders include grocery sales, prime memberships, and a better bottom line.

Since the outbreak of COVID-19, e-commerce grocery sales are at all-time highs. From March 12-15 alone, international online grocery sales boomed 210%, and therefore the number of orders placed has soared over 150% Y/Y. In fact, online grocery shopping is that the fastest growing product category altogether of e-commerce; its $20 billion in sales in 2019 is projected to just about double to $38 billion by 2023, per eMarketer. Whereas the demand for other product types may have decreased half-moon , Amazon’s grocery sales will set record benchmarks. it'll be interesting to ascertain the company’s margin of profit from this channel of revenue as these sales are going to be more crucial than ever to Amazon’s quarterly profitability.

Another metric worth watching when the report goes live is that the number of Prime users. This number surpassed 150 million in Q4 last year, and although Amazon doesn't formally report this statistic each quarter, it's only increased in Q1. During this point , many existing Prime users likely placed more orders than ever as they stockpiled necessities. Plus, as people currently have excess time on their hands, taking advantage of Amazon Music and Prime Video doesn’t hurt, either. Although the present number of Prime subscribers might not be sustainable, recent new members are during a position to get in bulk and consume an exceeding amount of content.

The other notable metric investors should be wary of is that the company’s Q1 operating expenses, and ultimately its net . it's estimated that Amazon had to take a position almost $700 million during half-moon alone so as to hide overtime and better wage costs. Additionally, because a bigger portion of its revenue goes to possess come from smaller-profit-generating segments like groceries, there's the likelihood that AMZN could realize higher, yet less profitable, sales.

5-stare Monness analyst Brian White is optimistic about the company’s ability to take care of its strong performance in both consumer and financial markets, which should be reflected in today's Q1 earnings call. White is among the highest 1% of all TipRanks experts and boasts a powerful 67% overall success rate. The analyst is confident that due to “how irreplaceable Amazon has proven to several during this crisis,” the corporate has been ready to maintain multiple dominant streams of income in e-commerce and AWS.

White projects Amazon’s e-commerce sales to grow 20% Y/Y within the US and 16% internationally. Additionally, the analyst is confident that AWS will convince be the company’s fastest growing business segment, forecasting Q1 Y/Y growth of 34% to $10.33 billion. As trends of increased digital activity persist, cloud storage through AWS will likely be a valuable consumer asset for an extended time moving forward. Finally, albeit Amazon’s total ad revenues may take successful , the corporate is nevertheless far better positioned than social media and program sites with its ability to cross advertise its e-commerce products.

All in all, White rates AMZN shares a Buy along side a 12-month price target of $2,650, which means about 10% upside from current levels.
Most analysts back White's confident combat the retail giant, as TipRanks analytics showcase AMZN as a robust Buy. Out of 43 analysts tracked within the past 3 months, 41 are bullish, while 1 remains sidelined, and 1 is bearish. Yet, tons of the optimism is already baked into these analysts' expectations. The 12-month average price target of $2,549 boasts potential upside of just 5% and a change from current levels.