Amazon 'Outperform' Rating Reiterated on More E-Commerce and Social Distancing

An outperform rating on Amazon is affirmed at Oppenheimer due to increased e-commerce use and social distancing.
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Shares of Amazon  (AMZN) - Get Report were higher after an analyst from Oppenheimer reiterated his outperform rating on the Seattle online-retailing giant, citing increased e-commerce use and social distancing sparked by the coronavirus pandemic.

Analyst Jason Helfstein affirmed his $2,400 share-price target, "as Covid-19 is driving widespread demand for essentials, combined with increased e-commerce."

"While some items are taking longer to be delivered, and grocery-delivery capacity is strained," Helfstein said in a note to clients, "we think Amazon is seeing record consumer demand, with share gains likely to remain post-virus. 

"This is supported by U.S. Android  (GOOGL) - Get Report downloads ... and website traffic to grocery URLs."

Given "unprecedented online grocery demand, combined with download data," Helfstein said, he was raising his estimates for Amazon's online-store segment to more than 20% year-over-year, up from more than 15%. He also increased his first-quarter physical-store sales to more than 5% year-over-year, compared with a previous call for more than 1%. 

"Amazon.com is one of the few large-cap companies benefiting from the secular shift to e-commerce," he said. 

"The company continues to gain share of global e-commerce with its deep product selection, low-cost express delivery through its Prime program, and breakthrough success of Kindle, Prime Video, and Amazon Music."

Earlier this week, Morgan Stanley analysts named Amazon their top e-commerce pick for the current challenging environment.

Amazon warned that it was running out of stock of popular household items and also deliveries via its Amazon Prime service are being delayed amid the coronavirus outbreak - and a massive surge in shoppers switching to ordering online.

CNBC reported on Thursday that Amazon temporarily closed its Prime Pantry delivery service as it faces a surge in orders tied to the coronavirus outbreak. 

The service gives Amazon Prime subscribers access to discounted grocery and household items, which they can then have delivered to their door. 

"Amazon Pantry is not accepting new orders at this time while we work to fulfill open orders and restock items following increased demand," a company spokesperson said Friday. "We are working hard to make these products available again and will update customers once we can take new orders."