Amazon stock rose to an all-time high on Wednesday, and we have every reason to believe that this run can continue as the e-commerce giant becomes the largest U.S. delivery company. Bank of America forecast on Wednesday that Amazon will deliver over 9 million packages globally this year. The analysts said that as the logistics network expanded and regionalized, delivery speeds “have improved dramatically, with nearly 25% of estimated units now delivered same- or next-day.” BofA estimates Amazon will deliver 5.9 million packages domestically in 2023 — more than United Parcel Service and FedEx. Despite “significant improvements” last year, analysts said the efficiency of Amazon’s logistics operations is below 2018 levels in numerous metrics. That gap is part of their argument for “more room for efficiency improvements” and “upside in retail margins in 2024.” For these reasons, BofA raised its price target on Amazon to $220 per share from $210 and maintained its Buy rating. BofA emphasized the importance of Amazon’s retail margin, as it has delivered a higher estimated outperformance than its cloud business Amazon Web Services (AWS). Over the past 18 months, Wall Street estimates for retail earnings growth for 2025 have risen 219%, while AWS earnings estimates have declined 2%. Analysts estimate that retail will account for 50% of Amazon’s generally accepted accounting principles (GAAP) operating income in 2027 — up from 33% in 2023. Amazon shares rose more than 4% on Wednesday — bringing year-to-date gains to more than 27%. The stock crossed a $2 trillion market cap during the session. In April, we raised our club price target to $200 after Amazon delivered a strong first quarter and what we believe was conservative guidance. On the conference call following the earnings release, CEO Andy Jassy said the first quarter saw the fastest delivery times ever for Prime customers. Amazon is expected to report its second-quarter report next month. AMZN YTD Mountain Amazon YTD Management’s focus on continuing to lower Amazon’s overall cost of serving its e-commerce customers and increasing logistics efficiency should be a concern for competitors. Jassy said customers on Amazon are making more purchases in categories such as everyday items, leading to higher overall spending and higher purchase frequency. “They’re lowering the cost of a package, which means they can do more same-day deliveries, which means CVS (and) Walgreens have to watch out,” Jim said Wednesday. Logistics efficiency has allowed Amazon to offer a large amount of products from different brands and categories that appeal to Prime members. Add to that same-day delivery, Jim asked rhetorically, “Why would you go to the store on your way home when delivery is at your house?” He added, “Cheaper to your door, same day—that’s been the holy grail for Amazon. They’re doing it.” According to Evercore ISI’s annual retail survey, it’s no surprise that “faster shipping speeds lead to more frequent purchases.” Fifty-one percent of respondents, a survey record, said they chose Amazon’s same-day delivery option. Among Prime members, the share was even higher, at 58 percent. Based on those results, Evercore believes Prime same-day delivery is a “multiplier of purchase frequency and overall spend.” Amazon’s retail power will be on display on July 16 and 17, when the company holds its latest Prime Day event. Last year, total U.S. online sales on those two days rose more than 6.5 percent to a record $12.7 billion, according to Adobe Analytics. Amazon said it sold 375 million items during the two-day sale, up from 300 million in 2022. Recent Wall Street analysis and Jim’s thoughts support the notion that there’s further room for Amazon stock to rise. But for club members with little or no stocks who are curious about where good entry points are for a stock trading at all-time highs, we’ve highlighted some buy levels for Amazon and other major tech players that have seen massive price increases this year. (Jim Cramer’s Charitable Trust is long AMZN. A full list of stocks can be found here.) As a subscriber to CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. After sending a trade alert, Jim waits 45 minutes before buying or selling a stock from his Charitable Trust’s portfolio. If Jim has spoken about a stock on television, he waits 72 hours after the trade alert is issued before executing the trade. THE INVESTING CLUB INFORMATION MENTIONED ABOVE IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY AND OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY EXISTS OR IS CREATED BY RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO PARTICULAR RESULT OR PROFIT IS GUARANTEED.
An Amazon employee pulls a cart full of packages for delivery on E 14th Street in New York City on July 12, 2022.
Michael M. Santiago |
Amazon The stock hit an all-time high on Wednesday, and we have every reason to believe its upward momentum can continue as the e-commerce giant becomes the largest delivery company in the United States.
