Wall Street started the week very bullish on Amazon.com ahead of its earnings release on Thursday. On Monday, two analysts raised their price targets over $1,000 , which had been seen as a key milestone for the stock.
Amazon shares were trading around $909 on Monday afternoon, up 1.2%.
With the company's push into cloud computing, advertising and original shows, there are more reasons than ever for investors to take notice of Amazon .
Here are two reasons analysts cited on Monday for buying the stock ahead of earnings.
1. Goldman Sachs analyst Heath Terry notes a crucial correlation between when Amazon invests money in new infrastructure and when revenue tends to accelerate. In general, the company's revenue tends to jump in the 12 to 18 months following a surge in investment. Amazon's spending on capital expenses jumped 47% in 2016, after dipping 6% in 2015. Wall Street tends to miss these kinds of turning points, he wrote. "Put simply, in a business that generates the high returns that Amazon has demonstrated, reinvesting in the business should ultimately pay off." He now sees the shares rising to $1,100 , up from his prior target of $1,000 .
2. Wedbush analyst Michael Pachter is even more bullish on Amazon , projecting that the stock will jump to $1,250 , from his previous estimate of $900 . He expects Amazon to start accepting payments via PayPal , giving it access to customers without traditional banking relationships. " Amazon currently has its own way to reach customers without credit via its 'Amazon Cash' program, but we expect PayPal's large customer base to significantly improve Amazon's reach," Pachter wrote.
Of course, this much positive buzz can also set Amazon up for fall, if the company can't reach these lofty expectations.
Big Picture: Analysts are getting more bullish ahead of Amazon earnings this week, citing more reasons to like the stock.
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