Goldman hikes Amazon price target to tie for highest on Wall Street

Published Mon, Jul 20 20208:06 AM EDTUpdated Mon, Jul 20 20204:05 PM EDT

(This story is for CNBC Pro subscribers only.) Rapid e-commerce growth for Amazon during the coronavirus crisis can drive the stock higher, according to Goldman Sachs. Goldman's new target is tied for the highest on Wall Street, equal to Jefferies' price prediction, according to FactSet. The Wall Street firm, which has a buy rating on Amazon , hiked its 12-month price target on the e-commerce giant on Monday to $3,800 per share from $3,000. That helped send Amazon shares up 7.9% on Monday. The $3,800 per share target implies nearly a 20% rally from Amazon's current levels. "We update our estimates primarily to reﬂect accelerating e-commerce growth in [North America]," Goldman Sachs analyst Heath Terry told clients. Shares of Amazon have soared more than 60% this year during the coronavirus crisis. The company is a major beneficiary of the millions of Americans stocking up on food and household items while avoiding physical stores. Goldman said Mastercard data is pointing to e-commerce spending growth of 93% year over year in May and Facteus data is showing consumer spending specifically at Amazon has been above 60% growth year over year since the end of April. Due to this rapid growth in adoption of Amazon's online delivery service, Goldman raised its second-quarter North America revenue estimates to growth of 48% since last year from growth of 33%. The firm also said the growth will carry over into the third quarter, hiking estimates to 34% growth from 24%. "Even with these revisions our estimates may prove too low," Terry added. "We revise our 2020-2022 revenue estimates +3% per year on average while EBITDA estimates are unchanged on average over the same period to account for near term spending related to COVID and expectations for a signiﬁcant increase in infrastructure spending to accommodate faster growth in both retail and AWS," Terry told clients. Goldman's new $3,800 price target reflects the increase in revenue estimates but now implies a 30 times earnings multiple for 2021, compared with Goldman's previous 24 times multiple. Terry also said Amazon's $10 billion debt raise and changes in foreign exchange are good for the stock. Jefferies also raised its price target to $3,800 on Monday. Analyst Brent Thill said he continues to see a fundamentally strong growth story in Amazon Web Services, advertising and e-commerce. — with reporting from CNBC's Michael Bloom.

Amazon CEO Jeff Bezos

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(This story is for CNBC Pro subscribers only.)

Rapid e-commerce growth for Amazon during the coronavirus crisis can drive the stock higher, according to Goldman Sachs.

Goldman's new target is tied for the highest on Wall Street, equal to Jefferies' price prediction, according to FactSet.