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Is Amazon Stock a Buy Heading Into Prime Day? This Is What You Need to Know

TipRanks
·3 mins read

It’s not as if Amazon (AMZN) needs more catalysts in 2020 but you can add another one to the list.

On Tuesday and Wednesday, Amazon will host its 6th annual Prime Day, an event featuring over a million deals for products at massively discounted prices both from Amazon and third-party sellers.

Truist analyst Yousseff Squali expects this year’s Prime Day to be Amazon’s largest ever.

The data, it appears, backs up his prediction. According to eMarketer, 2019 Prime Day sales were up 67% year-over-year to $6.93 billion. The forecast is for 2020 sales to hit $9.91 billion - a 43% year-over-year increase.

What is interesting about this year’s event, however, is its late kick off. Prime Day usually takes place in the summer, and was partly invented, Squali says, to drum up business during the summer lull, a period when there is traditionally less economic activity.

This year, COVID-19 has driven online shopping to new sales records. In Q2, total North America sales were up 43% year-over-year, compared to the 20% uptick reported in the same period a year ago. Expectations are for 30% growth in the third quarter; therefore, a summer boost was hardly needed to stimulate demand.

The event’s delay, Squali says, will usher in holiday season shopping a month earlier than usual. With another bonanza shopping spree about to start, Squali believes it is a “genius” move from Amazon.

“By pulling some demand forward, the company is able to smooth out the peak in demand somewhat as it spreads it across a longer period, and exert less pressure on its fulfillment network, while still recognizing all the revenues in the fourth quarter. This is all the more important that with Covid-19 and the need for social distancing, consumers are likely to avoid the rush on physical stores, which typically starts around Black Friday weekend, and instead turn to online to satisfy their shopping needs,” the 5-star analyst explained.

There’s no change to Squali’s Amazon rating which remains a Buy. The analyst has a $3,600 price target on the shares, implying a modest upside of 4.5% from current levels. (To watch Squali’s track record, click here)

All in all, the retail giant remains a Wall Street darling, as TipRanks analytics showcasing AMZN as a Strong Buy. All 37 analysts to have posted an Amazon review over the past 3 months rate the stock a Buy. At $3,764, the average price target could provide investors with returns of 9% over the next months. (See Amazon stock analysis on TipRanks)

To find good ideas for retail stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.