Despite a recent pullback, analysts on Wall Street remain extremely bullish on Amazon (NASDAQ:AMZN) stock and so too should investors.
Amazon stock has fallen 6% in the last month and is now 10% below its 52-week high. The drawdown comes amid the rotation out of megacap technology names as investors shift capital to small-cap securities and value stocks.
However, the decline in its share price is not a sign of any fundamental problems or shift in strategy at Amazon. In fact, analysts continue to love the stock, with many pounding the table and urging investors to buy it during the current dip.
The consensus view is that it won’t be long before Amazon stock is rising once again.
Bullish Outlook
The consensus view among 44 professional analysts who cover Amazon is that its stock is a “strong buy.”
In fact, all 44 analysts rate the stock a “buy.” There are no “hold” or “sell” ratings on the stock currently. Amazon is one of the few stocks where every analyst gives it a “buy” rating.
Equally impressive, the median price target on the stock is 23% higher than where it presently trades. The lowest price target on Amazon stock is $200, and that’s 10% higher than current levels. By all accounts, AMZN stock is undervalued right now.
Amazon is scheduled to report its second-quarter financial results on Aug. 1, and analysts have been revising up their ratings and price targets on the stock in the lead-up.
Bank of America (NYSE:BAC) just reaffirmed Amazon’s place on its coveted “U.S. 1 List” of top stocks to own. BMO Capital Markets (NYSE:BMO) just raised its price target on the stock from to $230 a share from $220 and reiterated its “outperform” buy-equivalent rating.
TD Securities (NYSE:TD), Baird and Mizuho (NYSE:MFG) also lifted their price targets on Amazon stock recently.
Strength to Strength
What has Wall Street so bullish on AMZN stock is that the company continues to succeed across its increasingly diverse business units and is going from strength to strength.
Consider that since the end of June, Amazon has secured the rights to broadcast NBA basketball games on its Prime streaming service over the next 11 years and announced plans to launch a discount e-commerce storefront to compete with cut-price online Chinese retailers Temu and Shein.
Amazon also announced that its July “Prime Day” generated a record $14.2 billion in online spending and was its most successful sales event ever.
Beyond these wins, Amazon continues to show strength in its market leading Amazon Web Services cloud computing unit and its core e-commerce platform.
Strong first-quarter financial results helped to propel Amazon’s market capitalization above $2 trillion for the first time before its share price pulled back to start the year’s second half.
Wall Street expects Amazon’s Q2 print to be very strong with estimates of a 2% year-over-year increase in revenue to $137.58 billion and 95 cents in earnings per share, which would be up 50% from a year earlier.
There are also rumors that Amazon might finally declare a quarterly dividend along with its Q2 results.
Buy AMZN Stock
Amazon is a leading technology giant whose business is going gangbusters and whose stock is undervalued. This is a potentially great setup for investors, especially heading into Q2 earnings on Aug. 1.
Wall Street is extremely bullish on Amazon and the outlook for its share price. Few stocks are as highly rated as Amazon is right now. With so many things working in its favor, now is an excellent time for investors to buy Amazon stock.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.
