Amazon could see more upside ahead, some strategists say, following
Amazon's potential for expansion in the consumer and grocery delivery services will drive the e-commerce giant's growth in years to come, said David Seaburg, head of sales trading at Cowen & Co.
"The growth in grocery, in our opinion, is really going to drive the growth of the company for the next five years," Seaburg said Friday on CNBC's "Trading Nation."
The U.S. food and beverage segment
Cowen & Co. analyst John Blackledge places a $1,050 price target on the stock, an 18 percent gain from Friday's closing price of $886.54. Seaburg said that may even be "a little conservative."
Analysts' average rating for Amazon
Susquehanna analyst Shyam Patil's price target of $1,250 is the most bullish, according to FactSet.
In a Feb. 2 note published as Amazon reported a revenue miss in the fourth quarter, Patil wrote that investors should buy Amazon "aggressively on any potential dislocation."
"We continue to view AMZN as one of the top large-cap growth
According to Stacey Gilbert, Susquehanna's head of derivative strategy, using options would be the best way to play Amazon right now.
"Options in Amazon are about as cheap as we have seen, so if you are uncomfortable that our $1,250 price target is too bullish, or you're just concerned that that downside could be higher probability than we're pricing, the options are certainly an attractive way to play it right now," Gilbert said.
For example, investors may want to go out three months and buy an at-the-money call option. That would cost a little over 4 percent of its spot price, so the investment wouldn't be cheap "in dollar terms," Gilbert said, but as a percent of spot price, "this is in the bottom 10 percentile of what we've seen over the last two years."
"So all that being said, if you wanted the embedded protection that comes in options, the options themselves are about as cheap as we've seen," she said.
