Amazon Analyst Turns Bullish After Sell-Off

The battering Amazon.com, Inc. AMZN shares took in the recent tech sell-off has led one analyst at Bernstein to turn bullish on the e-commerce giant's stock.

The Amazon Analyst: Mark Shmulik upgraded shares of Amazon from Market Perform to Outperform and maintaining a $3,400 price target.

The Amazon Takeaways: Amazon is positioned to increase its dominant share position when the return to physical stores occurs, Shmulik said in a Tuesday upgrade note.

The company has quietly made substantial inroads into grocery and shopping verticals, the analyst said. 

COVID-19-related disruption has vindicated Amazon's investment in one-day shipping, which helped the company deliver best-in-class service levels, he said.

All signs suggest Amazon is growing ata new level, increasing fulfillment capacity by 50% year-over-year in 2020 with more than 100 new facilities and plans to hire an additional 100,000 workers, Shmulik said.

The company's recent announcement of 1,000 neighborhood hubs aligns with Bernstein's original thesis of an omnichannel end state, the analyst said. 

Going forward, Amazon's share gains could be even more pronounced in 2021 than in 2020, with recent results indicating the company is only strengthening its dominant market position, he said.

Bernstein expects strong business momentum, with the fourth quarter likely to the catalyst.

"Amazon is well positioned to benefit from the similar permanent pull forward in the hyper-scale cloud market and we continue to be the bull on the street for Amazon's ad business," Shmulik said. 

The nearly 16% sell-off in Amazon shares in recent weeks creates an attractive entry point, the analyst said. 

Related Links:

Amazon's Hiring Spree Reinforces Strong Consumer Demand

Why Amazon Is Among Morgan Stanley's Top Picks For Q4, 2021

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