Shares of e-commerce king Amazon (AMZN) just keep on defying gravity. Amazon stock is up around 4% so far in today’s trading thanks to an analyst upgrade, bringing year-to-date gains for AMZN to around 30%.
UBS upgraded AMZN stock from “neutral” to “buy” and raised its price target on Amazon stock from $305 to $385.
That new AMZN price target translates to a hefty 20% upside on top of an already-stellar run.
And it makes UBS just the latest analyst to heap praise on soaring Amazon stock.
Analysts Love AMZN Stock
Analyst Eric J. Sheridan broke down the bullish reasoning for the UBS upgrade of AMZN stock, nodding to the fact that Amazon is riding a “bullish secular backdrop.” On top of that, Sheridan added that UBS:
- Expects a reacceleration of revenue growth and paid unit growth for AMZN in Q4 and beyond,
- Believes in the globalization of the Amazon Kindle ecosytem, and
- Sees the AMZN advertising business as under-appreciated.
Combined, UBS thinks those trends will improve operating results and keep Amazon stock climbing.
Then again, operating results for AMZN have plenty of room to improve, as both operating income and operating margins have been on steady downward trends in recent quarters. In Q2, for example, operating income declined from $107 million in 2012 to just $79 million in 2013.
Still, slipping metrics and quarterly losses haven’t stopped analysts from believing the Amazon stock, or investors from bidding AMZN higher.
Since 2009, shares of AMZN stock have increased more than six-fold. And in September alone, CRT Capital initiated a “buy” rating on AMZN stock, while Telsey Advisory Group upped its price target from $370 to $400 — an even more impressive 24% additional upside.
The question, of course, is how long investors and analysts will be satisfied will subpar Amazon earnings in exchange for strong revenue growth and big-time potential. Another clue will come on Oct. 24 when AMZN reports Q3 numbers.
But for now, as we await Amazon earnings there’s little sign analysts or investors expect anything except more upward momentum any time soon.
As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.