Amazon Soars Higher On Back Of High Price Target, AWS Satellite Announcement

Jun 30, 2020
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The overwhelming demand for online retailing for essential items and gadgets necessary to work and study from home during the first half of this year has proven to be a boon for online retailer and cloud services provider Amazon.com, Inc (NASDAQ:AMZN). The company has witnessed a record level of demand for its services and has had to expand its retail and employee presence throughout the United States at a time when most other companies are struggling to keep the shutters open.

This reality, it seems, is also fully present on research and investment firm Mizuho's mind as it increases Amazon's price target to $3,100/share today on the back of global e-commerce trends.

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Amazon Witnesses Price Target Hike On Back Of Strong Future E-Commerce Trends

The big question on everyone's mind as we exit the first half of a tumultuous year is whether Amazon will be able to sustain the recent spurt in the increased demand for its online retailing services. The ongoing global pandemic has shifted shopping trends to digital, with industry watchers and analysts expecting that the shift might be permanent after the crisis subsides.

To that end, Mizuho is optimistic about Amazon's future as evidenced by the company's latest price target hike for the retailer. Prior to today's revision, Mizuho's Amazon price target stood at $2,550/share and the increase marks for a roughly 16% upside over Amazon's share price at the close of trading today. Following the upgrade and the open of trading today, Amazon's shares have gained 1.3% on the open market as they slightly lead the NASDAQ-100 market index's 1.2% gain.

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Mizuho's price target is one of the highest that Amazon has received so far, as consensus estimates gathered by Marketbeat place the company's fair value as judged by analysts at a share price of $2,696 which is slightly lower than the levels the stock is currently trading at. In his note, analyst James Lee cites recent checks to state that globally, e-commerce is performing beyond expectations. He also states that Amazon's cloud arm AWS (Amazon Web Services) is set to profit massively from healthcare in the future, which will supplement the current boost in income that the retailer is experiencing from an uptick in demand for its services.

Additionally, the Mizuho analyst also goes on to predict Amazon's future. According to him, the retailer is set to benefit from an uptick in the sales of non-essential items on its platform and from an improvement in its "logistics efficiency" reports The Fly. Both these predictions are not counterintuitive as they fall in line with what some other folks on the street have been speculating as well.

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Healthcare and other demands for cloud computing have picked up recently due to the ongoing pandemic and the global shifts in work and education trends. Not only are datacenter product providers witnessing increased demand for healthcare products as a result, but demand for products for telecommunications servers and other platforms has also grown during the first half of 2020. Lee's belief that growth in demand for non-essential items will help Amazon in the future seems to be hedged on the premise that the retailer will witness the current growth of online retailing for groceries and other essentials stay constant in the future as buyers stick with their new spending habits.

In addition to receiving a price hike from Mizuho, Amazon also announced today that San Francisco, California-based image services provider Capella Space uses AWS for the full scale of its satellite command and control operations. Capella does this by using AWS' Ground Station services that allow it to control satellites and download data via AWS antennas located all over the world. The dispersion of antennas ensures that satellite operators do not have to wait before interacting with their satellites and can instead base this decision on antenna locations.

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