Posted on June 1st, 2020
Amazon.com Inc.’s (AMZN) stock has had a reasonably strong start to 2020. While the shares have had a few minor dips along the way, Amazon has steadily outperformed the S&P 500, rising by approximately 30.9% in comparison to the S&P 500’s loss of 5.8%.
Hedge funds were actively buying the stock in the first quarter, even ahead of recent months’ impressive strides on the WhaleWisdom Heatmap. At a time when many companies are struggling amidst the coronavirus pandemic and its impact on the economy, Amazon has benefitted from customers’ heightened needs and even panic buying of essentials such as toilet paper, hand sanitizer and food. While Amazon has seen disruption to its supply chain, often causing delays in getting products out, customer demand has not waivered.
Institutions and Hedge Funds Are Active
Amazon saw its position on the WhaleWisdom Heatmap in the first quarter of 2020, move up to 5 from 22. The rate of institutions buying the stock was almost twice that of those selling. During the quarter, the aggregate 13F shares held by institutions increased to approximately 355.9 million from 280.1 million, an increase of about 27.1%. The total 13F shares held by hedge funds increased to about 100.2 million from 91.7 million, an increase of almost 9.3%.
Analysts forecast strong growth in 2020 and estimate that earnings will fall by 18% to $18.85 per share, despite revenue rising by 23% to $345 billion. However, earnings are forecast to accelerate in 2021, by more than double to $37.48 per share, driven by strong revenue growth, which is estimated to increase by 18% to $406.6 billion.
Analysts have a favorable outlook for Amazon, raising price targets across the board. JPMorgan Chase & Co.’s raised Amazon’s price target to $3,000 from $2,525, while keeping an Overweight rating on the shares. Deutsche Bank raised its price target to $2,750 from $2,300, while maintaining a Buy rating. Finally, Susquehanna raised Amazon’s price target to $3,000 from $2,500, keeping a Buy rating on the shares.
With the current health pandemic and governmental restrictions closely intertwined to most Americans’ lives, there continues to be a rising trend in purchases from this e-commerce company. As top analysts have suggested, investors have reason to keep their faith in Amazon’s growth potential and continue to enjoy the ride.