A BofA analyst is optimistic about the growth of Amazon’s stock claiming the e-commerce giant’s cloud service is likely to be a positive driver in 2021.
Justin Post raised his price target on the stock to $4,000 from $3,650, while maintaining a Buy rating.
Shares were trading 2% higher during Thursday’s session.
“Amazon remains one of our top Online penetration stocks as eCommerce is still only 20% penetrated following a big bump in 2020, and the shift to the Cloud is still in early stages,” Post wrote in a note to investors.
Shares of the e-commerce giant were up 74% last year vs, the S&P 500 (^GSPC), which rose 16%.
The stock has recently underperformed vs the Nasdaq (^IXIC) with shares down 6% in the 4th quarter vs. an increase of 8% for the tech heavy index.
Justin blames this on the “slowing eCommerce growth since the mid-summer peak, concerns on tough comps starting in 2Q’21, and additional regulatory concerns with anti-big tech sentiment in Congress.”
However those retail comp concerns should abate by the third quarter of this year.
Post notes Amazon benefits from “diversified revenue streams like eCommerce, Cloud, grocery, advertising and subscription services.”
Post thinks that Amazon stock could hold up better than eCommerce peers if there is a rotation to vaccine/reopening stocks as lockdowns ease and more people get vaccinated against COVID-19.
BofA’s estimates for the company’s 4th quarter results are the street consensus, and Post believes a first quarter beat is possible given stimulus checks and continued stay at home orders.
