The COVID-19 pandemic has crushed companies across various industries, but Amazon will emerge as a “structural winner” from the global crisis and see its stock price continue to rise.
That’s the take from RBC Capital Markets, which increased its 12-month price target for Amazon stock to $3,300 on Monday, up from its previous estimate of $2,700. Shares are up around 25% this year, trading Monday at an all-time high of $2,511.
RBC conducted its eighth annual U.S. online shopping survey and found that the shift to online shopping “has accelerated materially” due to COVID-19, helping companies including Amazon, Walmart, Etsy, and eBay. RBC says it believes the surge will create a permanent shift in consumer behavior.
“Amazon-specific results clearly support the idea that Amazon is likely the best global play off of Online Retail,” RBC analysts wrote in a research note Sunday.
The survey showed customers making more frequent Amazon purchases, while 67% of respondents said they were Prime members, up from 59% last year. Adding more Prime members is key as they are the most loyal Amazon users, RBC noted.
However, not all is rosy with Amazon as the survey showed record low satisfaction with the company, potentially due to delivery delays and unavailability of certain items during the COVID-19 crisis.
Amazon has emerged as a lifeline for customers sheltering at home during the pandemic but keeping operations running during the crisis comes at a cost. The company is spending billions on COVID-related initiatives, including on new safety measures inside its warehouses, where employees have tested positive for the virus.
Amazon has grown to more than 935,000 employees worldwide. It is planning to offer permanent roles to 70% of the 175,000 temporary workers the company brought on to deal with surging demand driven by the pandemic.
“Providing for customers and protecting employees as this crisis continues for more months is going to take skill, humility, invention, and money. If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small,” Amazon CEO Jeff Bezos said in a lengthy statement as part of the company’s most recent quarterly earnings report.
