Even after Amazon's big rally this year, a Wall Street analyst still believes the stock can go higher based on some interesting analysis of Google search data.
Piper Jaffray's Michael Olson reaffirmed his overweight rating for Amazon, citing the company's web search analysis which pointed to robust June quarter sales growth for the e-commerce giant.
Our forecast "model suggests strong Q2'17 Amazon unit [sales] growth," Olson wrote in a note to clients Tuesday.
Amazon shares have rallied 38.6 percent this year through Monday, compared with the S&P 500's 10.3 percent return in that period.
The analyst reiterated his price target of $1,200 for Amazon, representing 15.5 percent upside from Monday's close.
Olson said the firm's web analysis revealed search interest for Amazon-related words grew 24 percent year over year in the June quarter versus 23 percent growth in the March quarter. He cited how Piper's search analysis had a 95 percent correlation with Amazon's retail sales unit growth in the previous 37 quarters.
Regarding Amazon's announced acquisition of Whole Foods Market last month, the analyst predicts the internet company will now increase its food category investment spending.
"We believe that WFM will accelerate Amazon's pursuit of grocery delivery and other fulfillment methods, which will necessitate a significant distribution buildout," he wrote. "While we think this is the right decision for shareholder value, it creates near-term margin headwinds."
Amazon is slated to report second quarter earnings on Thursday after the close.