Amazon (NASDAQ: AMZN) Can Do No Wrong

Pre coronavirus, Amazon trades at all time highs. Post coronavirus, Amazon trades at all-time highs. Has there ever been such an attractive stock to own? The e-commerce giant has proven its resilience and dependability time and time again to Wall Street and continues to be a darling for investors. While what felt like the rest of the market cratered in February and March, Amazon’s stock took little more than a routine dip of 25% from its February highs and has since more than made up for the difference. As the world went into an unprecedented lockdown, the number of people doing online shopping for everything from groceries to household items went through the roof and the world’s leading online retailer was ready to take full advantage.

By last week, shares were back at fresh heights after a 50% rally that put them a full 12% above their pre-pandemic prices. And it looks like there’s even more room above.

Stock Upgraded

In a note on Tuesday, Jefferies was out with a fresh price target of $2,800 which is the highest on Wall Street and 20% above Wednesday’s closing price. Analyst Brent Thill cited “attractive growth- adjusted valuation and upside to forward profit estimates" while noting that the pandemic related surge in demand is likely to drive long-term operating income in businesses that work with high margins. He didn’t stop there though. Over the next three years, Thill sees a clear path ahead for Amazon stock to reach $4,000 and it’s hard to argue with him.

Such was the surge in consumer demand in the first few weeks of the shutdown in March, that the company announced they were hiring an additional 100,000 workers. Earlier this month, they announced that a further 75,000 were needed. This, at a time when other companies were slashing costs and laying off employees, told its own story to investors.

Last week’s retail sales report saw massive year on year drop in brick and mortar categories like clothing (-51%), furniture/home furnishings (-25%) and food services (-23%). However, the nonstore retailer's category was up over 9%. Have a guess which category Amazon falls into. With earnings due out in a week's time, all eyes will be on the headline numbers to see just how big an effect the coronavirus has had.

Even aside from online sales, the company’s cloud hosting platform, AWS, is expected to see a huge boost in revenue as the work-from-home shift has boosted demand. AWS made up more than 11% of Amazon’s total revenue last quarter.

Getting Involved

It might not be all plain sailing, however. The folks over at Mizuho were less than bullish earlier this month when they cut their price target on the stock from $2,350 to $2,300; a fairly harmless move of $50 that Amazon stock has already moved past. Their concern stemmed from falling growth in their highly profitable ad business and revenue which they expect to be at 28%, down from their prior expectation of 40%.

Morgan Stanley is also on the hesitant side at current prices, and on Monday this week said in a note that they believed much of the stay-at-home boost was already priced into the stock and it could be time to take profits.

Still, Amazon has truly proven it can roll with the good times and the bad and with a stock that up more than 400% in little more than four years and almost 2,000% in the last decade, investors aren’t getting involved for a quick dip. Any pullback from these prices has to be considered a buying opportunity.