Many analysts follow Amazon (AMZN 0.81%) 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.
