Amazon.com (NASDAQ:AMZN) is one of the pricier stocks in the retail space today, but one prognosticator believes it has plenty of room to go higher. On Thursday, UBS analyst Eric Sheridan released a report on the stock reiterating his buy recommendation and his $4,000 price target -- roughly 25% above where it currently trades.
In his analysis, Sheridan addressed one major concern some investors and pundits have expressed recently about the company -- what its comparable sales results will look like in the near future.
After all, Amazon's business has surged in 2020, with impressive growth rates for a company this mature. In its most recently reported quarter, the e-commerce king delivered a 37% year-over-year improvement in revenue, well above even the most bullish analysts' projections. Meanwhile, its operating income nearly doubled, and its net income went up three-fold.
Acknowledging the challenge this year's excellent results posed in terms of the company's 2021 comps, Sheridan wrote: "While we continue to believe that Amazon is best positioned to benefit from high eCommerce adoption rate and the shift in consumer shopping behavior, we do expect to see a return to more normalized growth levels in '21 and beyond while pointing to potential [operating income] margin upside as the company is lapping significant COVID-19 related investments."
The UBS analyst made some strong points to support the bull case for Amazon. We should also bear in mind that the (hopefully) soon-to-be diminished threat from the coronavirus will spur growth in the broader economy. Since Amazon is the top name in e-commerce, it can reasonably be expected to be a major beneficiary from such an uptick. In that context, a $4,000 share price for the company looks entirely within the realm of possibility.
Amazon stock did not make the bulls happy on Thursday, though. It slipped by 0.5% on a day when the S&P 500 index closed lower by less than 0.1%.