Bank of America analysts raised their price target on Amazon (AMZN) - Get Report from $2,160 to $2,330 on Tuesday morning, saying the e-commerce and cloud giant has many growth levers to pull in 2020.
Specifically, the analysts cited Amazon's “improving delivery capabilities and still low cloud penetration,” and also noted that their survey data shows satisfied Prime customers and that free one-day shipping is gaining traction.
BofA's new price target is based on assigning an 8x multiple of Amazon’s cloud revenues, a 1.1x multiple of retail gross merchandise value and a a 6x multiple of advertising revenues.
Amazon shares were down 1.1% to $1,870.55 on Tuesday early morning.
Meanwhile, JPMorgan maintained its $2,200 price target on Amazon in a note also out on Tuesday morning, reiterating that Amazon is one of the bank’s best ideas for 2020.
Investors have been cautious about Amazon given concerns about profit margin risk and increased competition for AWS, according to JPMorgan. But the firm believes Amazon is well-positioned in 2020 as Prime 1-Day delivery drives revenue growth, profits improve as Amazon laps its heavy investment spending and AWS growth decelerates more slowly and maintains margin stability.