COVID-19’s disruption won’t impact Amazon’s (AMZN) “leading position in e-commerce and cloud services,” so claims Tigress Financial’s Ivan Feinseth.
It
is hard to argue. If any company has proven its resilience in the face
of the global pandemic, it is the e-commerce giant. Amazon shares are up
by 17% year-to-date, compared to the S&P's 15% drop.
Amazon’s
product portfolio is so wide and all-encompassing that according to
Feinseth, its business performance will only accelerate over the near
and long term.
Where
to start? Never mind the fact COVID-19 has driven consumers to further
rely on Amazon’s delivery services, the list of growth drivers makes for
an increasingly long read.
Take,
for example, Amazon’s voice service Alexa. Amazon has over 70% market
share in the voice home control technology market with “hundreds of
millions of Alexa enabled devices that customers interact with billions
of times a day.” Alexa’s features are constantly upgraded with new
capabilities added on a regular basis.
Or
AWS (Amazon Web Services). As Feinseth notes, “with $35 billion in
revenue over the NTM and greater margins than many of its other business
lines,” it is the world’s largest cloud provider, with a client list
including “many of the world’s leading companies.” The imminent rollout
of 5G networks should further drive adoption of cloud services, which
along with the expanding reach of edge computing will “drive further AWS
growth.”
What
about healthcare initiatives? Amazon bought internet pharmacy PillPack
in 2018, and last year rebranded it to PillPack by Amazon Pharmacy.
Amazon plans to move “beyond the mail delivery of prepackaged
medications into fulfilling prescriptions for acute medical needs.” The
retail prescription drug business is one worth more than $300 billion a
year, providing another significant growth opportunity.
With
a strong balance sheet and cash flows which continue “to fund ongoing
innovation and key growth initiatives,” The 5-star analyst need no more
convincing. Feinseth concludes, “AMZN's industry-leading position and
innovative ability will continue to drive an increasing Return on
Capital, as well as growing Economic Profit that will continue to lead
to greater shareholder value creation. I believe significant upside
exists from current levels and continue to recommend purchase.”
Accordingly,
Feinseth reiterated a Buy rating on Amazon shares but did not set a
price target. (To watch Feinseth’s track record, click here)
The
rest of the Street is hardly less effusive. The analyst consensus rates
Amazon a Strong Buy based on 38 Buys and 1 Hold rating. The average
price target is $2,433 and suggests possible upside of 12%. (See Amazon stock analysis on TipRanks)
