Amazon

20-for-1 stock split is set to place in June, making the shares a lot cheaper than the $3,379 each one currently goes for. Even so, split considerations aside, Evercore’s Mark Mahaney thinks the market is underappreciating how cheap the shares are right now.

In fact, comparing just AWS to other SaaS stocks’ valuations, the analyst thinks it could account for 95% of Amazon’s current valuation, making Amazon Retail “practically free.” “No wonder AMZN is our top Mega Cap Long,” the 5-star analyst went on to say.

That, however, is just one of what Mahaney terms “4 underappreciated elements of Amazon.”

So, what are the other three?

Well, one is the “shipping elasticity opportunity.” That is, Amazon’s incredible distribution capacity which is behind Amazon Next Day and Same Day shipping, an extremely appealing feature for consumers. “The faster the shipping, the more the spending,” notes Mahaney. What’s more, the availability of Super Same Day Shipping (5 hour window) has doubled over the past 6 months from 15% to reach 30% of the U.S. population. “We believe this creates a setup for upside to Street ’22 and ’23 AMZN Retail estimates, similar to what happened in ’19 when One Day was first rolled out,” the analyst opined.

Want another one? There’s a big, underappreciated revenue opportunity in brand advertising. This is a “key fact in plain sight.” YouTube’s ad revenue stood at $29 billion in 2021, yet Amazon’s was at $31 billion. Amazon’s is also growing at a faster pace, up by 56% compared to 46%. What’s more, given Amazon is a “closed-loop ecosystem,” unlike Google and Facebook, it won’t come across “privacy-driven ad attribution headwinds.”

Lastly, don’t discard the inroads the company is making in the grocery segment, which is after all the “largest category for consumer spend.” Based on pricing, digital offering and assortment, dunnhumby’s Retailer Preference Index (RPI) has ranked Amazon as the number 1 Grocery retailer – for the second year in a row. Furthermore, Mahaney noted that based on a 1,000 person U.S. survey, Amazon Fresh came in as the No. 2 Non-Meal Delivery platform, second only to Instacart.

So, good news for Amazon but what does it all mean for investors? Mahaney rates AMZN shares an Outperform (i.e. Buy), backed by a $4,300 price target. This implies one-year gains of 27% could be in the cards.

Overall, Wall Street’s cadre of analysts are fully behind Amazon. All 34 reviews on record are positive, naturally making the consensus view a Strong Buy. Shares are anticipated to deliver returns of 27% in the year ahead, considering the average target currently stands at $4,185 and change.