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Amazon Stock Is on the Move, Sustains Uptrend

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  • Amazon stock rose for the second consecutive week.
  • Analysts see more upside in Amazon stock.

After declining for six consecutive weeks, Amazon (AMZN) stock got a breather. The stock maintained the momentum last week. Now, the stock has risen for two consecutive weeks. Amazon stock closed 3.2% higher in the week ending September 6. Meanwhile, the stock rose 1.5% in the week ending August 30.

Part of the recovery has been due to an improvement in the overall market sentiment. Trade war tensions eased slightly last week. There was news that the US and China could resume talks in October. Meanwhile, Amazon’s efforts to reduce the delivery time for its Prime members supported its stock.

Amazon is investing in its fulfillment and logistics network to make one-day free delivery a standard for its Prime members. The company is also expanding the list of items eligible for one-day free delivery.

We expect that Amazon’s efforts to shorten the delivery time could boost its North American sales. The Prime membership subscription is also expected to increase. During the second-quarter conference call, management highlighted that the volumes have accelerated in North America. Consumers like free and fast delivery. Amazon expects its third-quarter net sales to mark 17%–24% growth.

While Amazon’s top line will likely be driven by strong e-commerce sales, its profitability could continue to benefit from strength in its cloud business. Amazon’s AWS business is driving a major chunk of its profits. The business is still very profitable.

Amazon dominates the cloud market. The company will likely benefit from geographic expansion and higher adoption of AWS services—mainly machine learning.

Will Amazon stock rise more?

Amazon stock has risen 22.1% YTD (year-to-date) as of September 6. However, analysts’ consensus target price indicates that it could increase more. Analysts recommend a target price of $2,269.04 on Amazon stock, which implies an additional upside of 23.8% based on its closing price of $1,833.51 on September 6.

Analysts expect Amazon’s top line to increase more than 20% in the second half of 2019. They expect the company to sustain the high growth in 2020 despite being up against tough YoY comparisons.

Meanwhile, analysts’ estimate suggests that Amazon’s bottom line will likely take a hit in the third quarter and decline. However, analysts remain upbeat for 2020. They expect more than 40% growth in the bottom line.

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