AMZN

Is Amazon Stock Going to $230? 1 Wall Street Analyst Thinks So.

Many analysts follow Amazon (NASDAQ: AMZN) stock. As expected, their price targets can vary considerably. According to data compiled by MarketWatch, the current spread is $160 to $235 per share.

Recently, a pundit tracking the stock moved rather close to that upper limit by raising his fair value estimation. Let's pick it apart a little to see if it's too optimistic, just right, or even a lowball prediction.

An Amazon optimist among optimists

In mid-April, MoffettNathanson's Michael Morton lifted his Amazon price target to $230. Well, maybe "lifted" is overstating the case; "bumped" would be more like it, as his previous level was $228. In making the change, Morton maintained his buy recommendation on the dominant online retailer. That price target implies a 30% upside for the stock over the next 12 months.

Morton's latest research note on Amazon came barely one week away from the company's scheduled first-quarter earnings release. He's particularly confident that the company will make a good showing with advertising revenue, which he anticipates will grow at double-digit percentage rates thanks to ads on its foundational site and what it terms "non-core" spots.

Other reasons for his gradually increasing bullishness include effective cost management, which should result in notably higher margins, and the company's ever-strengthening regional distribution network.

A multi-headed beast

Yes, Amazon is an easy stock to like, as it's been a relatively consistent winner over the years with a stock price that always seems to be climbing.

I'm bullish on it too, and Morton's latest analysis illustrates a major reason why -- with its fingers in a great many pies, Amazon has an increasing number of revenue/profitability sources. These include the world-beating Amazon Web Services, the company's increasingly sticky Prime Video streaming platform, and, of course, those unavoidable retail services. I think this stock is one of the surer bets, especially over the long term, and it's very much a buy.

Should you invest $1,000 in Amazon right now?

Before you buy stock in Amazon, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of April 22, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Tags

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.