S&P 500 the house of power Amazon‘s (NASDAQ: AMZN ) and having a great run. Year to date, the stock is up about 29%. As a long-term investor in the tech company (it’s the biggest stock holding in my portfolio right now), I’m very happy with that performance.
Is there an opportunity for additional share price gains? Wall Street analysts seem to think so. Here’s a look at their latest share price predictions.
The highest value of Q3
Before focusing on stock price targets, it’s worth touching on Amazon’s latest Q3 earnings. That’s because they were so good.
I’ve long said that Amazon’s profits will explode at some point, and this was reflected in the Q3 numbers. While net sales rose only 11% year-on-year to $159bn, operating income jumped from $11.2bn to $17.4bn – a 55% increase. During that period, earnings per share came in at $1.43 compared to $0.94 last year – up 52%.
To reduce the sales price, there was a 19% growth from the most important category of cloud computing (AWS). There was another 19% profit from digital advertising (Amazon is now the third largest player in the digital advertising space behind Meta again Alphabets).
Looking ahead, the company told investors that net sales are expected to reach $181.5bn-$188.5bn this quarter (7-11% growth). It expects operating income of $16bn-$20bn, compared to $13.2bn in the fourth quarter of 2023.
Overall, there was a lot to dislike in the results.
New stock price target
So it’s no surprise that many Wall Street analysts have raised their price targets on the stock in recent days. I have listed their new goals in the table below.
| A merchant | A new target | Old target |
| Raymond James | $230 | $205 |
| Morgan Stanley | $230 | $210 |
| Baird | $220 | $213 |
| Benchmark | $215 | $200 |
| BMO | $236 | $230 |
| BofA Global Research | $230 | $210 |
| Citi | $252 | $245 |
| Deutsche Bank | $232 | $225 |
| HSBC | $225 | $220 |
| Jeffries | $235 | $225 |
| JP Morgan | $250 | $230 |
| MoffettNathanson | $235 | $229 |
| Oppenheimer | $230 | $220 |
| Piper Sandler | $225 | $215 |
| RBC | $225 | $215 |
| Rosenblatt Securities | $236 | $221 |
| Roth MKM | $220 | $215 |
| Scotiabank | $246 | $245 |
| Stifel | $245 | $224 |
| Susquehanna | $230 | $220 |
| Telsey Advisory Group | $235 | $215 |
| Truist Securities | $270 | $265 |
| UBS | $230 | $223 |
| Wedbush | $250 | $225 |
| Oppenheimer | $230 | $220 |
As you can see, many sellers have raised their target prices. For listed buyers, Truist has a higher target at $270. The average target price in the table is $234, 19% above the current share price.
I’m looking at $250
My target price for Amazon stock is $250. I think it could get there in 12 months or so.
My thesis revolves around three main aspects. First is income growth. Next year, earnings per share (EPS) is expected to grow 20% to $6.00. I think there is room for improvement in the 2025 revenue forecast, however.
The second is measurement. Currently, the price-to-earnings (P/E) ratio using the 2025 EPS forecast is just 32. That’s a historic low for Amazon so I see room for higher valuations.
Third is the fact that the stock has underperformed other Big Tech stocks in recent years. So there may be more you can do. It’s worth noting here that compared to other Big Tech stocks, Amazon is undervalued by professional fund managers.
In short, I think the stock can go up as earnings go up and valuations go up.
Of course, there are no guarantees. Amazon may need to spend more money than expected on artificial intelligence infrastructure and this may affect its earnings. Another risk is the decline in consumer spending and the slow growth of its e-commerce segment.
Looking at the medium term however, I see the potential for strong gains.
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