Amazon stock price target maintained at $280 by Evercore ISI on grocery strategy

Investing.com - Evercore ISI has reiterated an Outperform rating and $280.00 price target on Amazon.com (NASDAQ:AMZN), highlighting the company’s strategic moves in the grocery sector. With a market capitalization of $2.39 trillion and revenue growth of nearly 11% in the last twelve months, Amazon continues to demonstrate its market dominance. According to InvestingPro data, 20 analysts have recently revised their earnings estimates upward for the upcoming period.

The firm notes that Amazon’s deeper integration of groceries into the Prime ecosystem strengthens customer engagement through a high-frequency purchase category, which increases both stickiness and customer lifetime value.

Evercore ISI points out that Amazon’s $25 free-delivery threshold puts pricing pressure on competitors like Instacart and Walmart+ (NYSE:WMT), potentially challenging rivals’ ability to compete on both convenience and cost factors.

The strategy aligns with Amazon’s previously announced $4 billion investment to expand its same-day and next-day delivery network to more than 4,000 smaller and rural U.S. cities by 2026, leveraging existing logistics infrastructure.

According to Evercore’s 13th Annual Amazon Survey, Prime Same-Day delivery acts as a multiplier for purchase frequency, category expansion, and overall customer spending on Amazon, demonstrating what the firm calls "Shipping Elasticity" – faster shipping leads to more frequent and larger shopping transactions.

In other recent news, Amazon has expanded its same-day delivery service for fresh groceries to over 1,000 cities and towns across the United States, with plans to reach more than 2,300 locations by the end of 2025. This expansion allows customers to order perishable items, intensifying competition with Walmart, although Mizuho has maintained its Outperform rating and $115 price target for Walmart. In another development, Freedom Broker raised its price target for Amazon to $255 from $240, citing strong second-quarter financial results that surpassed market expectations and highlighted retail efficiency gains. Additionally, Amazon Web Services has agreed to provide up to $1 billion in cloud discounts to U.S. government agencies to support IT transformation and AI innovation through 2028. Meanwhile, Anthropic, backed by Amazon, announced it will offer its Claude AI model to the U.S. government for $1, joining other AI startups in seeking federal contracts. These developments reflect Amazon’s strategic moves in both retail and technology sectors.

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