Amazon.com Inc (AMZN)

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Amazon Stock is Still Underpriced, Credit Suisse Says - Barrons.com

Amazon.com stock has 35% upside, according to analysts at Credit Suisse. Shares were up modestly on Wednesday while the broader market dipped.

The back story. Goldman Sachs analyst Heath Terry wrote earlier this week that Amazon (ticker: AMZN) is still gaining on the woes of traditional retail, though its Amazon Web Services unit and its streaming offerings have increasingly become key to its future.

Amazon stock has slightly trailed the broader market in 2019, up 18% year to date, and is down 2.9% in the trailing one-year period. The company is expected to report third-quarter earnings on Oct. 24 .
What's new. A team of analysts at Credit Suisse wrote in a note to clients Wednesday that they expect growth to accelerate for Amazon's e-commerce side due to the expansion of 1-Day Prime shipping, though the impact may be more muted by the fourth quarter.

They also write that the reason Amazon Web Services may grow at a slower pace is because the company is leaning more toward long-term deals with enterprise clients. That trade-off creates more sustained growth, they write, though revenue growth for AWS may decelerate to 36% in the third quarter.

Looking ahead. The analysts raised their price target to $2,400 from $2,225 and maintained an Outperform rating. The new price target represents about 35% upside from the stock's recent price.

They cited the e-commerce segment operating margin expansion "as it grows into its larger infrastructure," as well as optionality for faster-than-expected free-cash-flow growth with regard to 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."

Amazon shares closed Wednesday up 0.6%, to $1773.43 , while the S&P 500 closed down 0.2%.