Amazon (NASDAQ:AMZN) was uniquely positioned to take advantage of the pandemic. The rapid increase in online shopping has been a huge boost to the company. With coronavirus vaccines now being distributed, are Amazon shareholders going to feel a letdown? Don’t count on it. In fact, Amazon stock just got a big price target increase, with a Bank of America analyst predicting AMZN will hit $4,000.
The company reports Q4 earnings — which include the all-important holiday shopping season — on Feb. 2. Look for that to kickstart another round of growth for AMZN shares.
Amazon is an A-rated Portfolio Grader stock. It has a proven track record for growth, but offers the safety of a solid foundation. That’s important for when economic conditions change and result in market turbulence. That’s why Amazon features prominently in my list of seven “Mega-Cap Stocks With Solid Foundations.”
AMZN Gets a Target Price Upgrade
On Jan. 21, Bank of America analyst Justin Post (who maintained his buy rating on AMZN), raised his price target from $3,650 to $4,000. That’s despite the arrival of coronavirus vaccines that, in theory, could cut into Amazon sales as people return to shopping in stores.
Post acknowledges concerns such as slowing online shopping growth from 2020 pandemic levels, increasing competition, and increased government scrutiny of big tech companies. But he still sees growth opportunities in 2021 for Amazon.
In addition, Post points out that online shopping is just one part of Amazon’s business. The company also generates revenue from subscriptions, groceries, advertising and Amazon Web Services (AWS). In addition, Amazon has continued to invest heavily in its delivery infrastructure, which will help to support future services. That local delivery network will help initiatives like Amazon Pharmacy to grow.
While vaccinations could cut into online shopping gains, Post also points out that even after the pandemic, online shopping has just a 20% penetration rate. Amazon.com has plenty of room left for ongoing market growth.
In other words, it’s not unrealistic to expect to see continued Amazon stock growth. Even if the post-pandemic world does see shoppers back in the local retail stores, AMZN is much more than a one-trick pony.
Holiday Quarter Earnings Coming Feb. 2
At the risk of sounding like a broken record, I would be remiss if I didn’t mention Amazon’s upcoming fourth-quarter earnings report. As I have said repeatedly over the past several months, this is going to be a killer quarter. It includes Black Friday and Cyber Monday — which set sales records again in 2020.
And because of pandemic delays, this quarter also includes the two-day Prime Day shopping event. Wall Street is projecting that Amazon will top $100 billion in revenue for the quarter — a first in the company’s history.
What do you think is going to happen with Amazon stock when that announcement goes out?
Bottom Line on Amazon Stock
Despite peaking at the start of September, Amazon stock still posted an impressive 74% gain 2020. Shares in the e-commerce giant have been stalled for most of the past five months, but look for its Q4 earnings report on Feb. 2 to kickstart the next growth cycle. Bank of America thinks that could see AMZN hit $4,000 within 12 months. Are other analysts feeling the same degree of optimism?
The Wall Street Journal polled 48 investment analysts who offer coverage on Amazon stock. They have it rated as a consensus buy. In fact, that rating is all but unanimous — 41 buy, four overweight and three hold ratings. Their average 12-month price target of $3,839.42 has nearly 17% upside.
Amazon stock has that magic combination of momentum, a proven growth record, and a company with diverse lines of business — all of of which are performing very well. Vaccines for the coronavirus may mean online shopping eases up slightly compared to 2020 levels, but then there are other division like AWS to pick up any slack.
Amazon stock makes a great addition to any growth-focused portfolio. Just don’t wait too long, and remember Feb. 2 is coming up quickly.
On the date of publication, Louis Navellier had a long position in AMZN. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
