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Why Stifel Analyst Rates Amazon as a Buy


Stifel analyst Mark Kelley has recently initiated coverage of Amazon (ticker: AMZN) with a Buy rating and a $173 price target, suggesting a potential gain of 32% from the stock’s closing price on Monday.

Unmatched Scale and Selection

Kelley highlights the sheer scale of Amazon’s operations, emphasizing that no other e-commerce platform comes close to matching its size outside of China. Since its inception, Amazon has amassed a comprehensive selection of items available at competitive prices, making it an attractive choice for consumers.

Broad Fulfillment Network and Efficient Delivery

In addition to its vast product range, Kelley points out that Amazon boasts the broadest fulfillment network in the industry. This allows for shorter delivery times, which contributes to an enhanced customer experience.

Strong Resources for Third-Party Sellers

Amazon also stands out due to its extensive resources available for third-party sellers. This further enhances the platform’s appeal to potential merchants, as they can leverage Amazon’s established infrastructure and customer base.

Room for Growth

Kelley isn’t just bullish on Amazon’s current standing; he believes there is ample room for future growth. He points to potential gains from Amazon Web Services (AWS) and the expansion of the company’s advertising business.

AWS Growth Potential

Despite the economic pressures leading to reduced IT spending across various industries, Kelley suggests that AWS spending has either hit bottom or is nearing it. This indicates possible growth opportunities in cloud services, which could positively impact Amazon’s overall performance.

Positive Catalysts for the Stock

Analyst Youssef Squali from Truist echoes Kelley’s sentiments, expecting a 13% year-over-year revenue growth for AWS in the third quarter. Such performance would indicate that AWS growth has potentially reached its trough, serving as a positive catalyst for the stock.

Beyond Retail Media

While Amazon was a pioneer in the realm of retail media, Kelley emphasizes that the company is expanding its horizons. Amazon recently announced plans to introduce advertising on Prime Video in several countries, further broadening its revenue streams. Additionally, Amazon has partnered with social-media platform Pinterest, offering its advertisers as an incremental demand source.

Amazon is due to report its third-quarter results on October 26.

Despite a slight decline in premarket trading, with the stock down 0.9% to $131.41, Amazon has experienced a remarkable surge of 58% in 2023.

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