It’s never easy to be the person behind Wall Street’s loftiest target on a stock, particularly when it’s a high-profile name like Amazon.com (NASDAQ:AMZN) stock. All eyes are on your guess, first and foremost. If you’ve misjudged what lies ahead, investors blame you more than anybody else.

That’s particularly true for RBC Capital analyst Mark Mahaney’s call on AMZN stock. Not only is it bold, but it’s big, too. Mahaney believes Amazon stock should reach $2,600 per share in the foreseeable future, up more than 40% from its current price.

But the recently-upped target isn’t as outrageous or out-of-reach as some investors might think.

What He Said About Amazon Stock

Mahaney’s thesis was arbitrary, though well-reasoned. He explained in a note issued on Tuesday “We believe [Amazon] may well generate accelerating revenue and unit growth for some time as one-day (shipping) goes nationwide and world-wide.”

He went on to point out the self-fueling nature of the dynamic, saying “Here’s the flywheel – One-Day makes Prime more appealing for consumers, which makes FBA [Fulfillment By Amazon] more appealing to vendors, which increases supply on Prime, which makes Prime more appealing for consumers…”

His theory is that AMZN’s resulting growth will lead to profits of $39.91 per share of AMZN in 2020, up from his previous estimate of $33.90 per share of AMZN stock.

If Amazon’s EPS reaches $39.91, and its shares reach the analyst’s target of $2,600, its price-earnings ratio would be 65. That’s an outrageous valuation for most companies, but not for AMZN. There are two main reasons why AMZN stock can make the jump to $2,600.

The Right Stuff

As aggressive as Mahaney’s target feels, it really isn’t.

The first reason Amazon stock can easily jump 41%, or $767, to  $2,600 within the next several months is technical. Specifically, that kind of move is attainable for AMZN. For example, Amazon stock  rallied more than $1000 between late 2017 and August of last year.

Also, Amazon stock has dropped slightly over the last year, creating a well-established technical floor, plotted as a yellow dashed line on the chart.

And Mahaney is right ;  one-day shipping appears to be a game-changer for Amazon.com.

Actually, it’s difficult to determine exactly how much of Amazon’s past and projected profit growth stems from its relatively new one-day shipping initiative and how much of it was going to take shape anyway. Nevertheless, the timing of Amazon’s parabolic earnings growth does appear to have coincided with the advent of the one-day delivery option.

The valuation concern still stands, but AMZN stock has always been a name that trades more on its financial results and less on its valuation.

It’s also worth noting that analysts, on average, expect  the company to earn just a little less than $49 per share in 2021. That EPS and a share price of $2,600 would put AMZN’s P/E at only 53.

Stumbling Blocks

Still, there are pitfalls on the path from $1800 to $2600 per share. Neither of the two biggest ones will stunt Amazon’s growth. However, they could lower investors’ confidence in Amazon stock.

The more serious of the two stumbling blocks is the potential for antitrust rules.

The Department of Justice is reportedly scrutinizing Amazon, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Facebook (NASDAQ:FB) and Apple (NASDAQ:AAPL), looking for clear clues that these organizations deliberately sought to eliminate competition.

Finding decisive proof — a proverbial “smoking gun” — is a tall order. But, in an environment where distrust of big technology companies is the cultural norm, it’s certainly possible that new rules could soon take shape that would work against Amazon’s expansion.

The other possible pitfall is the potential pushback from environmentally-minded groups due to the pollution spurred by one-day shipping.

One-day deliveries are certainly convenient, butAmazon’s carbon footprint is shockingly large.

The Bottom Line on AMZN Stock

Nevertheless, Amazon has been given a pass on valuation by investors. It stands to reason most consumers will look the other way on the environmental front, too, unwilling to forego the convenience of getting anything they want the day after they buy it.

As for potential government action, it’s unclear how breaking up the world’s big tech titans would prevent Amazon from executing its business plan.

In the absence of any real impediments to the company’s growth, and barring a global recession, a price target of $2600 is far from crazy. Indeed, given how Amazon.com and Prime add real value by bringing low- price goods and cheap entertainment to homes, it’s arguable that Amazon.com could actually benefit from an economic slowdown.

Either way, $2600 is anything but out of reach for AMZN stock.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley.