Amazon.com, Inc. (AMZN), Apple Inc. (AAPL): The Tale of the Online Retail Leader and the Tech Giant


Analysts from Piper Jaffray and Drexel Hamilton are chiming in with confidence on Amazon.com, Inc. (NASDAQ:AMZN) and Apple Inc. (NASDAQ:AAPL). Following Amazon’s financial update this morning, one analyst sings the praises of Amazon Prime’s “revenue breakout” as he highlights key takeaways. Meanwhile, though another analyst recognizes some Apple Monitor seasonality weakness in last month’s sales, he remains a fervent fan of Apple in the bigger picture. Let’s dive in:

Amazon Prime Is the Real Winner 

Piper Jaffray analyst Michael Olson issues bullish coverage today on Amazon on the heels of the e-commerce and online retail giant’s 10-K released this morning, reiterating an Overweight on AMZN with a price target of $900, which represents a close to 9% increase from where the shares last closed.

Olson opines, “Amazon’s 10-K, published this morning, includes a further revenue breakdown that we believe is helpful in identifying the number of Prime subscribers and the level of GMV that Amazon is enabling. We believe these disclosures suggest that Amazon has ~72M paying Prime subscribers and that it enabled ~$250B of GMV in 2016, in line with our previous estimates.”

In the past, Amazon had disclosed revenue in the following three fundamental formats: North America Retail, International Retail, and AWS; Services and Product Revenue; and thirdly, major country revenue on a yearly basis. “In addition, the company breaks out shipping revenue,” continues the analyst.

Regarding his assessment of retail subscription services, Olson contends, “Prime is the largest contributor to this category and we estimate that Amazon exited Q4 at a ~$1.8b/quarter run-rate. Assuming 90% of this revenue line item is related to Prime and a $90 ASP (due to int’l cost being lower and deals offered around Prime Day and other events), this would suggest ~72M paying Prime subscribers.” According to his Stock with Teens survey, the analyst predicts the giant has approximately 60 million Prime subscribers in the U.S., which includes non-paying subscribers as well. The analyst concludes highlighting his analysis that Amazon enabled a total of roughly $250 billion of gross merchandise value (GMV) in 2016, and he considers the giant in solid standing moving forward.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Michael Olson is ranked #166 out of 4,395 analysts. Olson has a 63% success rate and realizes 11.7% in his yearly returns. When recommending AMZN, Olson yields 5.1% in average profits on the stock.

TipRanks analytics indicate AMZN as a Strong Buy. Out of 31 analysts polled by TipRanks in the last 3 months, 29 rate a Buy on AMZN stock while 2 maintain a Hold. The 12-month average price target stands at $936.90, marking a 13% upside from where the stock is currently trading.

Apple’s Slated Opportunities More Than Offset January Shortcomings

Drexel Hamilton analyst Brian White delves into the “Year of the Rooster,” which while an asset in December might not have been as kind to Apple in January. Following this morning’s stumble from the companies in the analyst’s Apple Monitor index, which tracks sales of nine ‘important’ publicly-traded Apple suppliers based in Taiwan, January sales were revealed as a seasonal miss.

White notes, “We believe an earlier than typical Chinese New Year bolstered December sales for our Apple Monitor and negatively impacted revenue in January.” Nonetheless, the analyst continues to be a buyer of the tech giant long-term, confident on its many prospects ahead. As such, White reiterates a Buy rating on shares of AAPL with a $185 price target, which represents a just under 40% increase from where the stock is currently trading.

However, “We believe Apple is in a sweet spot this year with the company finally returning to revenue growth in 1Q:FY17 and our expectation for annual growth to return in FY:17. Moreover, we believe the iPhone ‘X’ will drive another year of growth in FY:18 and we look forward to the potential for tax repatriation benefits that we hope will be partially used for a higher dividend yield. Also, Apple now expects its services revenue to double in the next four years. Longer-term, we believe everything will become a computer as highlighted at CES in January and Apple is the only computer-related company in the world with a consumer focus that develops hardware and software to work seamlessly together. As such, we continue to see new opportunities for Apple in the automotive, robotics, AR/VR and TV industries in the coming years,” White surmises, sure that Apple maintains its compelling appeal as one of the fundamentally undervalued stocks in the globe.

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Brian White is ranked #144 out of 4,395 analysts.White has a 64% success rate and gains 10.2% in his annual returns. When suggesting AAPL, White garners 22.5% in average profits on the stock.

TipRanks analytics exhibit AAPL as a Strong Buy. Based on 35 analysts polled by TipRanks in the last 3 months, 28 are bullish on Apple stock and 7 remain sidelined. With a return potential of 6%, the stock’s consensus target price stands at $140.62.