- RBC Capital Markets on Sunday raised its Amazon price target to $3,300 from $2,700 – a 33% increase from where shares traded at Friday’s close.
- The firm boosted its Amazon target price after its US online shopping survey showed that the company still dominates the space.
- The coronavirus pandemic has caused an accelerated shift to eCommerce.
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Amazon has a new biggest bull on Wall Street that expects the company’s online shopping dominance to lead it higher.
RBC Capital Markets on Sunday updated its Amazon price target to $3,300 from $2,700. The new target – the highest on Wall Street – is about 33% higher than where Amazon shares traded at Friday’s close.
Amazon gained as much as 1.4% in early trading Monday. RBC’s new price target applies a 22x target multiple to its adjusted Ebitda estimate of $71 billion for the year 2022.
RBC’s upgrade comes after its annual US online shopping survey, which again showed Amazon’s dominance in the industry.
"COVID-specific results clearly support the idea that Online Retail is a Structural Winner from the COVID Crisis," wrote a group of analysts led by Mark Mahaney. "And AMZN-specific results clearly support the idea that AMZN is likely the best global play off of Online Retail."
The survey results show that during the coronavirus pandemic, "online shopping has accelerated materially," benefiting Amazon, Walmart, Etsy, and eBay, according to the note.
Amazon is a clear winner in this boost, according to RBC. This year, 64% of Amazon customers made two or three purchases a month, up from 54% in 2019, survey results showed. Prime subscriptions have also boomed, surging to 67% from 59% a year earlier and putting Amazon on track to soon hit 200 million subscriptions worldwide, up from 150 million in January.
"This will be a real long-term benefit as Prime customers are the most loyal Amazon users," Mahaney wrote.
While Amazon is a clear outperformer, RBC also highlighted one negative point gleaned from the survey - customer satisfaction in the company is declining and at record lows.
In 2020, 64% of Amazon customers describe themselves as "extremely" or "very satisfied," down from 73% a year earlier. At the same time, a record-high 11% of customers said they are "slightly" or "not at all" satisfied, according to the note.
"The skew is still clearly positive, but the trend is disturbing," said Mahaney, adding, "It could reflect COVID-related delivery delays & unavailability of essential and non-essential items, but we will continue to monitor this."
Amazon has gained roughly 36% year-to-date.
