Amazon stock could rise above $240 due to these factors

Evercore ISI senior managing director and head of internet research Mark Mahaney joins Catalysts to break down his bull call on Amazon (AMZN). Mahaney has a $240 price target on the stock and argues it could go higher if growth in AWS (Amazon Web Services) continues to accelerate.

He explains that AWS is a “high-margin business” with a “huge” total addressable market: “Two years ago, the narrative was that they were losing share to Microsoft (MSFT). If that narrative changes – and the would change if they continue to show accelerating revenue growth – I think that takes the stock higher.”

Mahaney adds that the stock could also rise if retail sales growth of around 10% remains constant and retail margins continue to rise. He notes that Amazon is investing in a new satellite communications initiative called Project Kuiper, which could compete with Elon Musk’s Starlink.

“Investors want to know what’s happening with the key retail margin trends, say (example) Kuiper. If they can show that these are steadily, consistently, solidly increasing, I think if you put those two or three elements together, the stock goes higher,” Mahaney explains. “That’s why it’s one of our top picks.”

Amazon is currently scheduled to report third quarter earnings on Thursday, October 31st.

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This post was written by Melanie Riehl