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Wednesday, October 4, 2023

Is Amazon Stock a Good Buy After Prime Day? 5-Star Analyst Weighs In

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Amazon’s (AMZN) Prime Day event took place earlier than usual this year. Although the company hasn’t released any revenue figures so far, going by the post-event blurb, Truist analyst Youssef Squali thinks the noises made by Amazon imply it was an unqualified success.

“Despite moving the event from October to June this year for the 20 participating countries (up from 19 in 2020), all indications seem to be that Prime Day was a record sales period again for the company, with more than 250M items purchased worldwide,” the 5-star analyst said.

If the Prime Day press release is anything to go by, it looks like the ecommerce giant is paying more attention to SMBs (small and medium-sized businesses). Amazon shone a light on the $1.9 billion spent on small business products, with the figure amounting to a 100% year-over-year increase. Consumers were well incentivized to spend on the segment; In the run up to the event, Amazon once again ran a “Spend $10 Get $10” promotional campaign, which in return for supporting small businesses, customers received cash back.  

However, Squali thinks there was an ulterior motive to the SMB push.

“We view this as a calculated strategy given the recent regulatory pressure on Amazon from the FTC, which is investigating the competitive dynamics of Amazon’s marketplace business, and treatment of smaller sellers on the platform,” the analyst opined.

Amazon also believes that in comparison to previous years, consumers saved more than ever this Prime Day. No numbers are out yet, but last year, member savings were $1.4 billion. Among the big categories that got a shout-out were tools, beauty, nutrition, baby care, electronics, apparel, and household products. Many of Amazon’s hardware products – Fire TV Stick 4K, Fire HD 10 Tablet, Alexa Voice Remote and a plethora of 3P products making use of Alexa – were on discount and sold by the bucketload too.

“Given that Alexa is a core part of Amazon’s strategy of creating a deeper and stickier relationship with consumers,” Squali wrapped up, “We believe the continuation of this trend pays dividends over a long period.”

So, good news for Amazon and Prime customers, but what does it all mean for investors? Squali reiterates a Buy rating for AMZN shares and backs it up with a $4,000 price target. This target suggests the stock will be changing hands for a 17% premium a year from now. (To watch Squali’s track record, click here)

Amazon retains the Street’s full support. All 33 reviews are to Buy, which makes the analyst consensus on this stock a Strong Buy. The projection is for 12-month gains of 26%, given the average price target clocks in at $4,281.25. (See Amazon stock analysis on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The post Is Amazon Stock a Good Buy After Prime Day? 5-Star Analyst Weighs In appeared first on TipRanks Financial Blog.

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