Analyst Victor Anthony of Axiom recently weighed in on e-commerce leader Amazon.com, Inc. (NASDAQ:AMZN) and internet giant Alphabet Inc (NASDAQ:GOOGL) following positive data for the two companies. He is bullish on Amazon due to its leadership position within the industry and growing cloud service. For Google, Anthony maintains a positive stance due to accelerated growth in paid searches. Victor Anthony has a 61% success rate recommending stocks with a 14.3% average return per recommendation.
The analyst weighed in on Amazon following Channel Advisor SSS data for the company’s current quarter. Anthony is bullish on Amazon as “it is clear that Amazon continues to dominate e-commerce in the U.S” and believes the company’s international markets also displayed this success. UPS drivers affirmed this success, as they reported a significant increase in the amount of Amazon delivery boxes they handled this year. The analyst was also positive regarding “Amazon’s value proposition (Prime, selection, low prices, customer service, product reviews) [which] continues to resonate with consumers and keeps retention high.” The analyst stated that as a result, the company is in the early stages of “consolidating retail in the U.S.”
Anthony continued by commenting on Amazon’s newest segment, AWS. He believes that despite increased competition, AWS will continue to be an industry leader as more companies move to the cloud. He reported that a few large organizations recently contacted his firm to explore the advantages of the cloud, which according to the analyst, indicates continued growth for AWS, as companies want to source cloud services internally. The analyst believes that in the next 8 years, AWS will become a $100 billion business. He concludes by stating that the acceleration of top line growth, organic growth, increased margins and cash flow the company has seen in its past three quarters make Amazon “a core holding in both tech and retail.” He continues, “given its growing video and music offerings, media investors should take a hard look at Amazon in 2016 and consider owning the stock.” The analyst raised his 2016 2017 revenue estimates for the company and reiterates his Buy rating, raising his price target to $797 from $727.
According to TipRanks’ statistics, out of the 30 analysts who have rated the company in the past 3 months, 26 gave a Buy rating while 4 remain on the sidelines. The average 12-month price target for the stock is $745.86, marking a 12% upside from where shares last closed.
Anthony also weighed in on Alphabet, Google’s new parent company, after his firm received data from the three largest Search Engine Marketing companies: Merkle-RKG, iProspect, and IgnitionOne. The companies, which manage a combined $2 billion in paid searches, reported “accelerating growth in paid search spend for Google in 4Q15” through the amount of mobile clicks. The data indicated a few positive findings. First, all three companies were not affected by ad blockers on search. Second, the companies believe Google search will sustain its current growth rates for the upcoming year, without the threat of social media taking away share from the search. Instead, “both search and social will continue to strip away at traditional media spend.” The analyst continued by stating that he anticipates positive 4Q15 earnings results for Alphabet. Additionally, he believes “the next catalyst for Alphabet… is the promised segment breakout,” which will result in “the high profitability of the core Google business (search, YouTube, display, Google Play).”
As a result of this positive data and sentiment, the analyst increased his 2016 and 2017 estimates for the company. He concludes, “Alphabet should be viewed as a core tech and media holding for 2016 given its high-teens organic growth rates, high profitability, dominant market shares in search and video, capital returns, increasing transparency, Moonshots optionality, and solid management team.” Anthony reiterates his Buy rating on Alphabet shares, increasing his price target to $1,000 from $900.
According to TipRanks’ statistics, out of the 34 analysts who have rated the company in the past 3 months, 33 gave a Buy rating while 1 remains on the sidelines. The average 12-month price target for the stock is $848.03, marking an 11% upside from where shares last closed.