Amazon Touches New High On Upgrade & Grocery Sales

Shares of Amazon (NASDAQ:AMZN) surged over 2% on Tuesday to touch a new all-time intraday trading high of $1,339.94 per share after BMO Capital Markets analysts raised their price target for the e-commerce power. On top of that, online analytics firm One Click Retail detailed Amazon’s online grocery ascendance in a new report.

BMO (TO:BMO) analysts raised their Amazon price target from $1,200 per share to $1,600 per share in a note to clients on Monday. The new price target represents a 23% upside from Amazon’s Friday closing price of $1,305.20 per share. One of the major reasons for this substantial increase in Amazon’s price target stems from BMO’s confidence in the company’s advertising business.

“We believe the emergence of Amazon's advertising business can support both margin and multiple expansion and could be a greater catalyst for the shares if management shares more data points like it did for Amazon Web Services,” BMO analyst Daniel Salmon wrote in the note.

The analysts went on to estimate that Amazon’s sponsored product ads, headline search ads, and product display ads offer the company an $18 billion revenue opportunity in the medium term.

Online Grocery Sales

Jeff Bezos’ company purchased Whole Foods for $13.7 billion last summer in a move that could eventually shake up the entire grocery industry. Now it seems that Amazon’s acquisition of the organic grocery giant is already making a splash.

Only a week after One Click Retail published a report that estimated Amazon accounted for 44% of total U.S. e-commerce sales in 2017—which represented about 4% of total U.S. retail sales—the firm announced that Amazon’s push into the grocery business has led to a big boost in sales (also read: You'll Never Believe Amazon's Share of the E-Commerce Market).

One Click’s report estimates that Amazon sold $2 billion worth of food and beverages in 2017, which accounts for an 18% share of the total online grocery market in the U.S. According to One Click, the company was able to boost its online grocery sales by 59% year-over-year in the U.S. Furthermore, Amazon also saw its grocery sales pop 56% in the UK and 54% in Germany.

AmazonFresh accounted for $350 million in sales, while Whole Foods 365 Everyday Value products led to $11 million in revenues. In the last four months of 2017, AmazonFresh sales hit $135 million, which marked a 35% climb from the previous four-month period.

The e-commerce research firm found that Amazon’s U.S. cold beverage sales—driven by bottled water and energy drinks—surged 65% from the year-ago period and accounted for $350 million in sales. The other top-selling categories were Coffee, Snack Food, Breakfast Foods, and Candy & Gum. This highlights that, at least for now, shoppers have leaned towards purchasing non-perishable items on Amazon.

However, the report noted that Amazon sold out of over 90% of its 2,000 Whole Foods 365 Everyday Value products in the first week. The Whole Foods brand has consistently been the second-best selling brand among Amazon’s private labels.

“The Amazon and Whole Foods partnership is a perfect match, doubling down on the campaign begun by Amazon Fresh to change consumer perceptions of online grocery sales from 'non-perishables only' to high quality, fresh, 'whole'-some foods,” One Click VP Nathan Rigby said in a statement.

Although the numbers don’t jump off the page just yet, AmazonFresh did pull in $350 million in revenues, with dairy and meat accounting for the top two categories.

Including today’s gains, shares of Amazon have already jumped over 14% since the start of 2018.

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