While the thought of a Federal Trade Commission (FTC) lawsuit might leave some businesses sweating bullets at night, e-retailing giant Amazon (NASDAQ:AMZN) may have less of a problem than you’d expect. In fact, new word from one analyst suggests that Amazon investors might win no matter how the lawsuit ultimately comes out. That optimism didn’t extend to investors, though, as they pulled back slightly and sent Amazon stock down somewhat in Thursday morning’s trading.
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Needham analyst Laura Martin stepped in and suggested that, no matter what, Amazon investors were likely to come out ahead here. First, the notion that the lawsuit would be resolved quickly was roundly dismissed; Martin estimates it will be two to three years before the suit even gets to trial in a lower court. Throw on top of that another three to five years just to get through the appeals process—no matter who wins, someone will appeal—and that means this trial is going to take a minimum of five years just to have some form of resolution. And, should there be any kind of shift in the political landscape—like Kahn is removed from the FTC—the FTC will likely quietly drop the whole thing.
Amazon, for its part, offered a statement about the trial, noting that going on with it would hurt businesses as well as customers, making deliveries longer and products more expensive. Amazon noted that the FTC’s lawsuit, if successful, would produce “anti-competitive and anti-consumer” policies, which is pretty much the exact opposite of what the FTC should do. Yet, even if the FTC succeeded, some analysts believe that investors would benefit as the result would be multiple pure-play businesses instead of a conglomerate lacking agility.
Is Amazon a Good Stock to Buy Right Now?
Yet, this lawsuit has left analysts mostly unfazed. A combination of 40 Buy ratings and one Hold makes Amazon stock a consensus-rated Strong Buy. Further, with an average price target of $175.90, Amazon stock offers investors a healthy 40.87% upside potential.
