Amazon.com stock should climb even higher because the retailer is getting even more efficient in shipping and filling orders, giving it a competitive advantage versus its peers, says Piper Sandler.
Analyst Thomas Champion raised his price target on Amazon (ticker: AMZN) to $185 from $175, which implies a 37% gain from the stock’s closing price on Wednesday. Champion also maintained his Overweight rating on the stock, saying in a research note Thursday that he thinks “now is the time to buy.”
“A second look at comments from the 2Q earnings call suggest to us AMZN may have reached a new threshold in Shipping & Fulfillment cost efficiency. We see evidence of this emerging in gross margins & 3Q23 incremental operating income guide was by far the strongest in company history,” Champion said in the note.
During Amazon’s earnings conference call on Aug. 3, Chief Executive Andrew Jassy said that the e-commerce giant saw “meaningful improvement” in its effort to lower the cost of filling orders. This included transitioning the retailer’s fulfillment and transportation network from one national system in the U.S. to eight separate regions serving smaller areas, Jassy said.
Champion is also upbeat about the company’s potential to gain market share.
“CEO Jassy also noted the customer elasticities driven by faster delivery,” Champion said. “…AMZN’s investments are driving a customer service advantage versus peers, some of which are now dealing with shrink issues.” Shrink is the loss of merchandise due to theft and errors.
Shares of Amazon closed lower 2.7% on Thursday at $131.84. The stock has surged 57% in 2023.
