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Amazon had its worst stock performance in 3 years and lagged other tech giants in 2019 — here’s what Wall Street thinks is ahead for the company this year (AMZN)


Jeff bezos

2020 is shaping up to be a big year for Amazon.
From cloud computing to same-day shipping, expectations and competition for Amazon are heating up.
Here are some of the key aspects of the business to watch this year.
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Amazon had a relatively tough year in 2019.

Investors grew concerned about Amazon’s massive investments in faster delivery and its AWS cloud unit. The increasingly hostile regulatory environment and growing competition also dampened investor sentiment.

As a result, Amazon’s stock went up just 23% in 2019 — its worst performance in three years and below the S&P 500’s returns for the first time since 2014, according to the S&P Global Market Intelligence. Other tech giants, like Apple, Facebook, Alphabet, and Microsoft, all saw their shares do better than Amazon during the year.

We asked Wall Street analysts what’s ahead for Amazon in 2020.

While most of them remain bullish, they said this is the year investors are hoping to see more concrete results from all the investments Amazon has been making, across shipping, cloud computing, and hardware devices. They’re also keeping a close eye on how Amazon’s competitive landscape will change in the cloud space, and whether its newer businesses, like advertising, will continue to show strong growth.

Here’s what analysts think is ahead for Amazon in 2020:

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Last year’s underperformance comes after years of dramatic growth for Amazon. Almost all of the analysts who cover Amazon still recommend buying its stock.

The biggest drag on Amazon’s stock last year was the huge investments in one-day shipping and AWS cloud, analysts say. Investors tend to have general skepticism until they see any payoff from the spending.

Still, Wall Street analysts remain more bullish than ever about Amazon. In fact, 47 of the 49 analysts that track Amazon’s stock recommend buying it, according to Factset. That’s more endorsements than any other S&P 500 company.

UBS’s Eric Sheridan told Business Insider that there’s been a lot of questions about Amazon’s rate of investment over the past year. But he thinks those fears are “overdone” now, and that Amazon’s stock is actually undervalued at the current price given its upside potential.

“We think the risk reward sets up very well,” said Sheridan, who has a “buy” rating and a price target of $2,100 for Amazon.

Not all analysts are convinced by Amazon’s investments yet. Andrew Murphy, an analyst for Loup Ventures, said Amazon’s stock is “fairly valued” at its current levels, as there’s still a lot of investor concern around its spending.

“Amazon is tightening its death-grip on retail, but the associated costs and the impact on margins may weigh on the stock in 2020,” Murphy told Business Insider.

Amazon’s one-day shipping initiative and its financial impact will continue to draw investor scrutiny this year. But most analysts believe it’s the right investment that will lead to long-term growth.

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Source:: Business Insider

      

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