- According to Goldman Sachs, “accelerating the growth of e-commerce” will propel Amazon to new all-time highs.
- Goldman and Jefferies on Monday assigned a high street price target on Amazon of $ 3,800, representing upside potential of 28% since Friday’s close.
- The update occurs when consumers have relied heavily on e-commerce purchases amid the COVID-19 pandemic.
- Amazon rose as much as 6% in trading on Monday following Goldman and Jefferies target price increases.
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Amazon has already made $ 561 billion in market value to date, and if Goldman Sachs and Jefferies are right, expect that number to continue to grow.
On Monday, both companies raised their Amazon target price to as high as $ 3,800 from Wall Street, representing a potential upside of 28% since Friday’s close. Goldman previously had a target price of $ 3,000 for Amazon.
According to Goldman, Amazon is about to benefit from “accelerating the growth of electronic commerce” amid the COVID-19 pandemic. Mastercard data shows e-commerce has grown 93% year-over-year in May, and weekly Facteus data shows that consumer spending on the Amazon platform has increased more than 60% year-over-year since the end of April. .
Taking these data figures into account, Goldman raised its North American revenue estimate to a 48% year-over-year increase for the second quarter, compared to its previous estimate of 33% growth. Goldman said he expects the strength of Amazon’s e-commerce unit to continue in the third quarter.
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Goldman added that its updated estimates of revenue growth “may be too low,” suggesting that there may be an even greater advantage to Goldman’s target price increase on Monday.
While Goldman increased its revenue growth estimate for Amazon for years to come, it kept Ebitda estimates unchanged to account for the increased spending related to COVID-19 and infrastructure for Amazon Web Services and its retail operations “to accommodate faster growth, “according to the Note.
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Goldman derived its $ 3,800 price target for Amazon from a sum of parts valuation implying a 2021 company value / 30x Ebitda multiple.
The main downside risks to Goldman’s bullish stance on Amazon include competition, investment margin pressures and valuation, according to the note.
Amazon shares rose as much as 6% to $ 3,142.21 in trading on Monday.
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