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RBC Raises Amazon Price Target to $3,300

By Jennifer Saibil – Jun 8, 2020 at 10:43AM

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As sales surge, is up the only way to go?

How high can Amazon.com (AMZN -3.01%) go? RBC Capital analyst Mark Mahaney thinks as high as $3,300 -- 10% greater than the next nearest estimate on Wall Street of $3,000.

Still the king of e-commerce

The COVID-19 pandemic is only serving to push the retail giant into a greater position than it previously occupied. A retail survey by Mahaney revealed that Amazon "is likely the best global play off online retail," he told clients. He also pointed out that prime membership penetration soared recently to 67% of the U.S. population, up from 59% at the end of 2019, with membership nearing the 200 million mark after closing 2019 at 150 million.

Delivery worker handing a customer a package

Image source: Getty Images.

In the first quarter, which ended March 31 and included about two weeks of full pandemic stay-at-home orders as well as some initial stocking up, sales increased 26% year over year to $75.5 billion. But all that didn't translate into a stronger bottom line.

"If you're a share owner in Amazon, you may want to take a seat, because we're not thinking small," the company said. It invested in safety precautions and wage increases for workers on the front lines and all those expenses added up into a decrease of $2.5 billion in net income.

The second quarter will include the months of April and May, when most Americans were at home and completely reliant on online shopping for a lot of their goods. With prime memberships up, those sales may keep climbing.

Amazon shares are trading at $2,509 as of this morning, a 34% increase year to date. 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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