Analyst with Bank of America believe Amazon (AMZN) still has “runway ahead” to improve the efficiency of its retail operations. The analysts bumped up their price target for Amazon stock to 220 from 210 in a note for clients Wednesday.
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After a rough 2022, Amazon stock rallied more than 80% last year and is up 24% this year. Key to that growth has been the improving profitability of Amazon’s sprawling e-commerce operations. That is part of why BofA Securities rates Amazon as its top pick among large-cap tech companies in 2024.
“Retail has been the big driver of recent estimate revisions (over Amazon Web Services), and with (first quarter) efficiencies exceeding expectations, we think Amazon is on a good path to drive more retail margin leverage upside in 2024,” BofA Securities analyst Justin Post wrote Wednesday.
Post added that while 2023 was a “banner year” for Amazon’s logistics operations, “our analysis suggests runway still ahead for efficiency gains.”
On the stock market today, Amazon stock is up more than 2% at 190.21 in morning trades.
Amazon Projected To Deliver 9 Billion Packages
Amazon could deliver more than 9 billion package globally this year, according to BofA estimates. That would place its logistics business as the largest U.S. shipper.
A reorganization of Amazon’s fulfillment network has helped the company deliver those packages more cheaply and quickly. But Post noted that metrics such as units sold per square foot still lag record levels from 2018 for Amazon.
In BofA’s view, there are several efforts underway from Amazon that could further improve retail efficiency. That includes routing more packages through specialized same-day fulfillment sites, utilizing robotics and incentivizing sellers to more evenly distribute inventory across Amazon’s logistics network.
Improved efficiencies would allow Amazon to outperform current for retail profits, the research note added, helping Amazon stock.
BofA’s price target of 220 implies roughly 18% upside from Amazon’s closing price on Friday.
Amazon Stock: Flat Base Pattern
Amazon stock has formed a new base. Shares are approaching a 191.70 flat-base buy point, according to MarketSurge pattern recognition.
But Amazon stock is still working to break out to new heights. Shares have traded tightly since early April, after Amazon closed at a record high for the first time in the three years.
The stock hit another high above 191 in early May, but Amazon is yet to push decisively beyond July 2021 levels near 188.
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