Amazon's new biggest Wall Street bull says the stock will surge 33% after a new customer survey found it's still the top online-shopping option
- RBC Capital Markets on Sunday raised its Amazon price target to $3,300 from $2,700 — a 33% increase from where shares traded at Friday's close.
- The firm boosted its Amazon target price after its US online-shopping survey found that the company still dominated the space.
- The coronavirus pandemic has accelerated the shift to e-commerce, RBC said.
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Amazon has a new biggest bull on Wall Street, and it expects the company's online-shopping dominance to lead it higher.
RBC Capital Markets on Sunday raised its Amazon price target to $3,300 from $2,700. The new target — the highest on Wall Street — is about 33% higher than where Amazon shares traded at Friday's close.
Amazon gained as much as 1.4% in early trading on Monday. RBC's new price target applied a 22x target multiple to its adjusted Ebitda estimate of $71 billion for 2022.
RBC's upgrade came after its annual US online-shopping survey again found that Amazon dominated the industry.
"COVID-specific results clearly support the idea that Online Retail is a Structural Winner from the COVID Crisis," a group of analysts led by Mark Mahaney wrote. "And AMZN-specific results clearly support the idea that AMZN is likely the best global play off of Online Retail."
The note said the survey found that during the coronavirus pandemic, "online shopping has accelerated materially," benefiting Amazon, Walmart, Etsy, and eBay.
Amazon is a clear winner in this boost, according to RBC. This year, 64% of Amazon customers made two or three purchases a month, up from 54% in 2019, the survey found. Prime subscriptions have also boomed, surging to 67% from 59% a year earlier and putting Amazon on track to soon hit 200 million subscriptions worldwide, up from 150 million in January.
"This will be a real long-term benefit as Prime customers are the most loyal Amazon users," Mahaney wrote.
While Amazon is a clear outperformer, RBC also highlighted one negative point gleaned from the survey: Customer satisfaction in the company is at record lows and declining.
In 2020, 64% of Amazon customers surveyed described themselves as "extremely" or "very satisfied," down from 73% a year earlier, the note said. Meanwhile, a record high of 11% of customers said they were "slightly" or "not at all" satisfied.
"The skew is still clearly positive, but the trend is disturbing," Mahaney said, adding, "It could reflect COVID-related delivery delays & unavailability of essential and non-essential items, but we will continue to monitor this."
Amazon has gained roughly 36% year-to-date.
