RBC Lifts Amazon Price Target To Street-High $3,300, Says It's 'Best Global Play' On E-Commerce

Shares of e-commerce giant Amazon.com, Inc. AMZN received a big price target boost from RBC Capital Markets — here's why. 

The Amazon Analyst: Mark Mahaney reiterated an Outperform rating on Amazon and hiked the price target for the shares from $2,700 to a Street-high $3,300, suggesting roughly 33% upside.

The Amazon Thesis: The COVID-19 pandemic is causing an accelerated shift to e-commerce, and the adoption of online shopping has accelerated considerably, Mahaney said in a Sunday note, citing RBC's eighth annual U.S. Online Shopping Survey and industry data. (See his track record here.)

The analyst views Amazon, Walmart Inc WMT and Etsy Inc ETSY as beneficiaries of this secular shift.

"AMZN is likely the best global play off of online retail."

Year-over-year non-store sales growth has been accelerating for four consecutive months, he said, citing U.S. Census Bureau data.

Mahaney sees Amazon as a structural winner that's showing significant improvement in frequency and speed trends.

About 64% of Amazon customers make at least two to three purchases per month compared to 54% in 2019, and about 45% of respondents said they spent over $200 in the last 90 days compared to 36% in 2019, the analyst said, citing survey data.

"Most importantly, Prime penetration surged to 67% vs. 59% in 2019," he said.

Mahaney sees Amazon reaching 200 million Prime subscribers worldwide, up from 150 million in January.

This will be a real long-term benefit, as Prime customers are the most loyal Amazon users, the analyst said. 

On the flipside, he said the survey unearthed declining and record low satisfaction levels across Amazon customers. This could be due to COVID-related delivery delays and the unavailability of essential and non-essential items, Mahaney said. 

AMZN Price Action: At last check, Amazon shares were adding 1.09% to $2,510. 

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Courtesy photo. 

Posted In: Amazon PrimeMark MahaneyRBC Capital MarketsAnalyst ColorPrice TargetReiterationAnalyst Ratings