Shares of Amazon may be trading in correction territory after falling 13% from July's high, but Credit Suisse sees a 35% rally ahead for the stock. The firm reiterated its outperform rating on the stock on Wednesday, and raised its 12-month target to $2,400 from $2,225. The new target represents a 35% upside to where the stock is currently trading. The firm did, however, lower its full-year EPS expectations for Amazon from $38.47 to $37.72 based on some "deceleration" in Amazon Web Services as the company shifts to a mix of "larger enterprise clients," and as 1-Day Prime is rolled out. But the short-term heavy capital spending will drive long-term gains. "We maintain our outperform rating based on e-commerce segment operating margin expansion as it grows into its larger infrastructure, optionality for faster-than-expected FCF [free cashflow] growth vis-à-vis its advertising segment, and upward bias to AWS revenue forecasts and likely more moderate deceleration path as suggested by ongoing capital intensity in the business," analyst Stephen Ju wrote in a note to clients. Big tech has gotten hit hard in recent months. In addition to a broader market rotation into value names at the expense of growth stocks, Washington has turned a sharper eye to the potentially outsized role tech companies exercise within the broader market. Democratic hopeful Senator Elizabeth Warren specifically called out Amazon at Tuesday night's primary debate. "You get to be the umpire in the baseball game and you get to be the team, but you don't get to do both at the same time," she said referring to the company's wide-ranging influence. Amazon shares gained 0.6% during Wednesday's trading session. - CNBC's Michael Bloom contributed reporting.
Shares of Amazon may be trading in correction territory after falling 13% from July's high, but Credit Suisse sees a 35% rally ahead for the stock.