S&P 500 powerhouse Amazon‘s(NASDAQ: AMZN) having a great run. Year to date, the stock’s up about 29%. As a long-term investor in the tech company (it’s the largest individual stock holding in my portfolio right now), I’m pretty happy with that performance.
Is there scope for further share price gains? Wall Street analysts seem to think so. Here’s a look at their latest share price forecasts.
Brilliant Q3 earnings
Before focusing on the share price targets, it’s worth touching on Amazon’s recent Q3 earnings. That’s because they were excellent.
I’ve been saying for a while that Amazon’s profits are going to explode higher at some point, and this was seen in the Q3 numbers. While net sales only increased 11% year on year to $159bn, operating income jumped from $11.2bn to $17.4bn – a 55% increase. Meanwhile, earnings per share came in at $1.43 versus $0.94 a year earlier – up 52%.
Breaking the sales figure down, there was 19% growth from the all-important cloud computing division (AWS). There was another 19% gain from digital ads (Amazon’s now the third largest player in the digital advertising space behind Meta and Alphabet).
Looking ahead, the company told investors that net sales are expected to range $181.5bn-$188.5bn this quarter (growth of 7-11%). It expects operating income of $16bn-$20bn, compared with $13.2bn in the fourth quarter of 2023.
Overall, there was a lot to like in the results.
New share price targets
It’s therefore no surprise that loads of Wall Street analysts have increased their price targets for the stock in recent days. I’ve listed their new targets in the table below.
| Broker | New target | Old target |
| Raymond James | $230 | $205 |
| Morgan Stanley | $230 | $210 |
| Baird | $220 | $213 |
| Benchmark | $215 | $200 |
| BMO | $236 | $230 |
| BofA Global Research | $230 | $210 |
| Citi | $252 | $245 |
| Deutsche Bank | $232 | $225 |
| HSBC | $225 | $220 |
| Jefferies | $235 | $225 |
| JP Morgan | $250 | $230 |
| MoffettNathanson | $235 | $229 |
| Oppenheimer | $230 | $220 |
| Piper Sandler | $225 | $215 |
| RBC | $225 | $215 |
| Rosenblatt Securities | $236 | $221 |
| Roth MKM | $220 | $215 |
| Scotiabank | $246 | $245 |
| Stifel | $245 | $224 |
| Susquehanna | $230 | $220 |
| Telsey Advisory Group | $235 | $215 |
| Truist Securities | $270 | $265 |
| UBS | $230 | $223 |
| Wedbush | $250 | $225 |
| Oppenheimer | $230 | $220 |
As you can see, a lot of brokers have hiked their price targets. Of the brokers listed, Truist has the highest target at $270. The average of the price targets in the table is $234, 19% above the current share price.
I’m looking for $250
My own price target for Amazon stock’s $250. I reckon it can get there over the next 12 months or so.
My thesis revolves around three key factors. The first is earnings growth. Next year, earnings per share (EPS) are projected to grow by 20% to $6.00. I think there’s scope for 2025 earnings forecast upgrades, however.
The second is the valuation. Currently, the price-to-earnings (P/E) ratio using the 2025 EPS forecast is just 32. That’s pretty much a historical low for Amazon so I see room for a higher valuation.
The third is the fact that the stock’s lagged the other Big Tech shares in recent years. So it could have some catching up to do. It’s worth noting here that compared to the other Big Tech stocks, Amazon’s under-owned by professional fund managers.
In summary, I think the stock can rise as earnings climb and the valuation moves higher.
Of course, there are no guarantees. Amazon may need to spend more than expected on artificial intelligence infrastructure and this could hit its earnings. Another risk is a slowdown in consumer spending and lower growth in its e-commerce division.
Taking a medium-term view however, I see potential for strong gains.
This post was originally published on Motley Fool
