Logistics Investment Sends Amazon Back Into $1T Range

Amazon’s Logistics Investment Pays Off

Amazon’s investments in logistics have paid off; it’s back in the $1 trillion stock value arena after the company’s results exceeded industry expectations, according to a report by Reuters.

The company’s one-day shipping offering has caused Prime membership to spike as well. Out of the 51 brokerages following Amazon’s results, about half of them raised their yearly price targets. In early Friday (Jan. 31) trading, shares in the company were up 9 percent to $2,036.

Benchmark analysts wrote a note called “Not-so-subtle Reminder Amazon is Still King,” and said that Amazon still has a “size and capacity advantage.” The company upped its price target by $150 to $2,400.

Amazon has been hitting hard in not only its shipping business, but in its web services as well –AWS grew 34 percent. Prime membership also jumped by 32 percent.

“Amazon is easily less than halfway through transforming retail by exploiting deep fulfillment moats established over many years,” said Canaccord Genuity Analyst Michael Graham.

JPMorgan is also very pro-Amazon. Analyst Doug Anmuth raised his price target from $2,200 to $2,525.

“Overall, in our view, Amazon’s ability to re-accelerate revenue growth at such a large scale is evidence that its (Prime one-day) investments are paying off,” Anmuth said. “We’re increasingly optimistic Amazon will continue to execute throughout 2020 on both the top and bottom line.”

Amazon has regularly been in and out of the $1 trillion zone, sharing that distinction with companies like Microsoft, Apple and Google parent company Alphabet. Many analysts predict that Visa and Mastercard will be the next companies to join that club.

Amazon has been actively working to make its deliveries better and faster. The company is working with United Parcel Service (UPS) on its initiatives, and UPS gets about one-tenth of its revenue from Amazon. One prominent analyst said the company’s logistics arm could pass UPS in half a decade.