AMZN, $2,600.00 is closer than you think. Amazon's logistics and one day service should allow them to hit this price target with ease.

Amazon Inc. (NASDAQ:AMZN)

December 9, 2019

With the stock currently trading at $1750.00 why does RBC Capital Markets analyst Mark Mahaney stay committed to his $2600.00 price target? He raised his price target from $2,250.00 to $2600.00 for two reasons, the company's logistical improvements and its new one day delivery service. Mark Mahaney estimates Amazon's new 1 day delivery service will lead to an additional 24 Billion dollars in sales leading to another record year of top line sales growth as Amazon Inc. continues to maintain retail dominance.

Logistically, Amazon last year created its own small business program that lets anyone run their own package delivery fleet saving them Billions of dollars in last mile delivery fees. RBC also sees the one-day initiative as a win for sellers on Amazon, noting a flywheel effect. “One-Day makes Prime more appealing for consumers, which makes FBA (Fulfillment by Amazon) more appealing for vendors, which increases supply on Prime, which makes Prime more appealing for consumers.” It could also increase the potential for Amazon as a third-party logistics provider, RBC said. The company is building out its own delivery network and is cutting ties with long time partner Fed Ex. These savings initiatives are sure to show up on Amazon's bottom line to the tune of Billions in profits.

We see Amazon $2,600.00 as a no brainer. Amazon currently trades at only 3x this years sales forecast. Their improvement in logistics coupled with their one day service should drive top line and bottom line growth to record levels. Amazon has a 20 year jump on its logistics with 174 fulfillment centers globally. Their competitors simply cannot compete logistically and their product selection cannot be replicated.  Investors such as Warren Buffet and Mark Cuban have big bets on Amazon and with good reason. $2,600.00 will someday look like only the beginning of a sales and logistics organization that controls retail on a global scale. Amazon's dominance cannot be denied. A Strong Buy at $1,750.00.

We give AMZN a giant thumbs up!

Stock structure:

Outstanding shares: 495,797,220

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