Amazon Stock: Can It Reach $300 Despite Lagging Price?

Amazon's stock price has been lagging behind its accelerating operating story, which has raised questions about whether it can reach $300. The company's AWS unit posted a record 36.7% growth in Q2, and its advertising business is growing at 26%. However, shares have only risen by 9.13% year-to-date to $251.89.

The main factors holding Amazon back are capital spending and a headline overhang following news of an inquiry into a fatal plane crash involving Amazon operations. Despite this, the company's beta is high at 1.443, making it more susceptible to market fluctuations.

Analysts are bullish on Amazon, with a consensus target of $328.17 and a forward P/E ratio of 18x. However, our internal model predicts an even higher price target of $353.36 for a 40.29% upside. We argue that this may be too cautious and that the company's EPS estimates have been revised sharply higher.

To reach $300, Amazon would need to achieve a gain of 19.1% with a forward P/E ratio of 21x. This is seen as a low bar for a business compounding operating income at 43.24% year-over-year.