Victor Anthony Says Buy Into Amazon's Weakness, Raises Target To $2,225

Amazon.com, Inc. AMZN has been one of the hottest stocks in the market over the past several years, but the fun has been on pause for Amazon investors in the past month. Amazon's stock has tanked by 24 percent, but one analyst says the sell-off is an obvious buying opportunity.

The Analyst

Aegis analyst Victor Anthony reiterated his Buy rating for Amazon and raised his price target from $2,065 to $2,225.

The Thesis

Anthony said fears over a second consecutive quarterly earnings miss, a fourth-quarter guidance miss, increasing e-commerce and cloud competition, slowing online sales growth and potential regulatory threats are overblown. Despite concerns online sales growth could drop to the single digits in 2019, Anthony said Amazon’s long-term trajectory is just fine.

“Amazon, in our view, remains one of the best longer-term values in Tech and we still see a path to where the shares could double over the next three years,” he wrote.

Amazon has given long-term investors plenty of opportunities throughout history to buy the stock on post-earnings weakness, and Anthony said it has been a wise decision every time. Amazon’s margins are expanding, its revenue growth is impressive, and its free cash flow is improving. AWS has been a particularly strong performer, generating 46 percent revenue growth in the most recent quarter.

Anthony said Amazon’s advertising business could generate $12 billion in high-margin revenue next year, and its retail business is still gaining market share from brick-and-mortar sellers.

Price Action

Amazon's stock traded lower by 1 percent Tuesday to $1,522.28.

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