Analysts Say Recent Amazon Moves Could Boost Profits

Amazon (NASDAQ:AMZN) has been busy of late, closing pop-up stores, pushing the grocery business and focusing on advertising, steps analysts say will help boost its profits. Those analysts, from KeyBanc, boosted the online retailer's price target.

The KeyBanc analysts raised their recommended allocation on Amazon to overweight and boosted the price target to $2,100, implying nearly a 25% gain from Thursday's close. The shares climbed $17.77, or 1.1%, Friday, in the first hour of trade, to $1,703.99

The company, in the view of the analysts, "is taking a number of operational moves to improve profitability in core retail, which could drive mid-term earnings above the current consensus view. AMZN is pivoting to a company with accelerating profitability."

Specifically, the analyst team pointed to Amazon's decision to shutter its pop-up kiosks used to sell hardware products. The analysts also cited potential in the mid-market grocery business and Fresh Pickup service.

Finally, the analysts sais, Amazon Web Services (AWS) and advertising could boost margins by $100 billion and lead to significant margin expansion, the analysts said.

Earlier this week, AWS announced that Gogo, Inc., the leading global provider of broadband connectivity products and services for aviation, is moving its entire infrastructure to AWS, going all-in on the world’s leading cloud.

Wednesday’s news release said “Gogo has already migrated the vast majority of its commercial and business aviation divisions to AWS and is leveraging a range of AWS services, including analytics, serverless, database, and storage to improve in-flight internet and entertainment experiences for millions of passengers around the world.”