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Amazon (NASDAQ: AMZN) stock has more than doubled since bottoming out in 2022. Supporting those gains is a substantial improvement in the company's profits, which is still a catalyst for the stock.

Following another strong earnings report last month, Loop Capital analyst Rob Sanderson raised the price target on the shares from $215 to $225. That implies a 21% upside from the current price, which could be a realistic possibility.

Why buy Amazon stock

The analyst pointed out that Amazon's retail business drove most of the company's growth in operating profit in the first quarter. Operating income more than tripled to $15.3 billion compared to the prior-year period, as the North American operating segment saw a massive 455% year-over-year increase in operating profit. Amazon also turned a year-ago loss in the international segment into an operating profit of $903 million.

Amazon's cost-reduction efforts are far from over. Management is leaving no stone unturned and currently working on several areas to drive costs down further. This spells more profit growth, which could lift the stock higher this year.

Sanderson believes that Amazon will continue to report profits that exceed Wall Street's expectations. The company has been executing on this initiative for several quarters now, but the amount of costs it is removing from operations has surprised most analysts. In Q1, Amazon beat analysts' consensus earnings estimate by 18%.

The stock trades at a forward price-to-earnings ratio of 41 based on this year's consensus earnings estimates. Considering that analysts are expecting Amazon's earnings to more than double over the next two years, it seems reasonable to expect the stock will continue to move higher alongside the company's earnings growth. Investors should expect the shares to potentially reach the analyst's price target within the next 12 months.

Should you invest $1,000 in Amazon right now?

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.