Amazon (AMZN, +2.20%) stocks staged a prime performance, supported by a cast of analysts and investors who propelled the stock to record breaking levels on Tuesday.
This is all in preparation for what promises to be a star studded launch of the Amazon “Prime Day” on Wednesday which will be followed by the report of second quarter results on 23 July.
By midday Tuesday, Amazon stocks had gained 2.2% after hitting an all-time intraday peak of $465.95 in earlier trading. This heralded the fourth straight day that the stock posted gains of 1% or more and with the hype around “Prime Day”, the record breaking performance can be expected to continue during Wednesday's trading.
The stock has been upgraded to buy from neutral by UBS analyst Eric Sheridan who also increased the Amazon price target by 18% to $550. This figure is 17% higher than the average analyst target compiled by FactSet of $470.20.
Sheridan is excited about the rapid growth in the higher spending Prime subscriber base in expectation of Prime Day. He added, “Further, we believe the resultant increase in Prime eligible product selection will lead to greater site conversion, increased annual spend per customer, and ultimately, higher levels of gross merchandise value for Amazon.”
Meanwhile, another fan of Amazon stock is Wells Fargo analyst Matt Nemer who reiterated his top outperform rating. He also raised his target for the stock to a range between $495 and $520 from his previous target range of $421 to $450. He believes that consensus analyst operating income estimates are “too conservative”, saying in a note that he believes the company will exceed expectations by more than 10% when the Q2 figures are revealed.
The Amazon stock, which is this year’s fourth best performer among S&P 500 (SPX) companies, has increased in value by 50% during that period. This has resulted in a jump in the company’s market value to $216.8 billion, an upward move of $72.25 billion. This value is higher than 22 of the 30 stocks that make up the Dow Jones Industrial Average (DJIA) of which Amazon is not a member.
For Amazon to be taken into consideration for potential membership of the blue chip Dow club, it would have to reduce its stock price significantly as the Dow is a price weighted index. The way forward in this regard, would be a stock split, similar to that done by Apple when it split 7 for 1 last year to satisfy the price weighting requirements of the index.
MT4 Chart: Amazon