Published:
April 12, 2020 6:00 PM UTC

Pandemic-Proof Amazon Stock is Goldman’s Pick for 30% Surge in 12 Months

Amazon is not only weathering the coronavirus pandemic, it's expanding at a time when most businesses are shuttering their doors.
  • Goldman Sachs expects Amazon to weather the coronavirus pandemic.
  • The online retailer is benefiting from the shelter-in-place orders.
  • Its cloud services division is booming too.

The coronavirus pandemic has decimated investor value running into the trillions. Worse, it’s still not clear when normalcy will return.

Regardless of when lockdowns are lifted, investors are being advised to have Amazon (NASDAQ:AMZN) in their portfolio, according to Wall Street.

Goldman Sachs: AMZN is a Buy

According to Goldman Sachs, the online retail giant is likely to outperform going forward.

Analyst Chris Hussey says Amazon is set to increase its market share as the coronavirus crisis unfolds:

… we see a step function increase in both e-commerce’s share of retail and Amazon’s share of e-commerce coming out of this crisis.

Goldman’s 12-month price target for Amazon is $2,600. The online retail giant closed Thursday at $2,042 suggesting a potential gain of 27%. Year-to-date AMZN is up about 9%.

Amazon is up nearly 10% since the year started. | Source: TradingView

Amazon is expanding at a time of record unemployment

Signs of Amazon’s growing importance at a time of shelter-at-home orders are already there.

In March, Amazon announced it was hiring 100,000 people across its American fulfilment centers and delivery network in an effort to satisfy a drastic increase in demand.

Source: Twitter

Amazon has seen such extraordinary demand for essential household items such as groceries and toilet paper that it has had to limit non-essential items at its warehouses. This will allow it to concentrate on the much-needed consumer staples and medical supplies.

The e-commerce giant also recently announced that it was suspending Amazon Shipping, its third-party shipping program. This is another indication of the swelling demand. The program uses Amazon’s excess delivery capacity to ship non-Amazon packages. With the surge in demand, there’s no longer exists excess capacity.

The demand surge has also seen Amazon postpone Prime Day, its annual shopping event, by a month to at least August.

Who else is saying you stock up on Amazon?

Besides its retail market share, Amazon’s cloud business is booming too. Some of the largest clients of Amazon Web Services include online video streaming giant Netflix (NASDAQ:NFLX) and teleconferencing app Zoom (NASDAQ:ZM). With the conference shutdowns, these services have seen unprecedented demand for entertainment and business, respectively.

Goldman Sachs is not alone in recommending Amazon as a crisis-proof stock. Over 40 analysts have placed a ‘Buy’ rating on the stock.

The consensus rating on Amazon is ‘Buy’. | Source: Wall Street Journal

The average stock price target is $2,425 and the highest is $2,788, which means AMZN could appreciate by up to 37% if the latter prediction materializes.

It has not been all rosy for the online retailer during the pandemic, though. Its workers have been getting restive over their possible exposure to the novel coronavirus.

Last month, Amazon workers walked out from a New York warehouse demanding hazard pay and personal protection equipment. Earlier this month, the same was repeated at a Michigan facility.

Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.

This article was edited by Sam Bourgi.

Last modified: April 12, 2020 3:20 PM UTC

Mark Emem @wetalkmarkets

I cover business and the stock market for CCN. Currently based out of Nairobi, Kenya. Feel free to get in touch with me. Email: wetalkmarkets[at]yahoo.com

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