GBH Insights analyst Daniel Ives is out pounding the table on Amazon.com, Inc. (NASDAQ:AMZN), betting on the consumer “flywheel” and its rising momentum into the new year.
“Could a trillion-dollar valuation now be in the cards?” ponders Ives, wagering the company is worth between $900 billion and a whopping $1 trillion, calling the “bread and butter consumer piece” a monster $600 to $650 billion of that; and the Amazon Web Services/enterprise segment assessed to be between $300 to $350 billion. True this will not hit “overnight,” but Ives anticipates Amazon is paving the way for trillion dolla4r valuation to realize within the next year to year and a half.
Pinpointing better e-commerce growth opportunities ready to set into motion in 2018, the analyst reiterates a Highly Attractive rating on AMZN stock while hiking the price target from $1,500 to $1,850, which implies a 22% upside from current levels. (To watch Ives’ track record, click here)
The North America retail channel is moving along strong with the Prime membership “moat” continuing to steamroll as AMZN attracts even more global consumer attention. Meanwhile, Ives sees the online e-commerce king hitting over $80 in earnings power within the next 4 years, and a rise in sum-of-the-parts valuation as the company outreaches to more slices of the consumer puzzle- all “with advertising and healthcare front and center.”
“While near-term there is a major focus on significant investments around fulfillment, Prime, Echo/Alexa, AWS, and integrating the Whole Foods acquisition into the fold which could depress margins over the next few quarters, we believe this is ‘near term pain for long-term gain’ as Amazon has a unique window of opportunity to double down on its consumer and enterprise initiatives for 2018 and drive significant growth/cash flow for the coming years as Bezos & Co. further diversifies the Amazon franchise globally with major margin expansion looking ahead into 2019/2020 and beyond,” writes Ives, who notes, “the Bezos strategic path both on the consumer and enterprise fronts are still in the middle innings of playing out and Amazon remains a ‘green light’ name to own at these levels.”
By next year, this bull sees AMZN on its way to capturing roughly half of all domestic e-commerce spending, leaving this company a favorite of Ives’ “secular tech growth names” for 2018.
TipRanks indicates this consumer empire has earned one of the strongest analyst consensus rating on the Street. Out of 38 analysts polled in the last 3 months, 36 are bullish on Amazon stock while 2 remain sidelined. With a return potential of nearly 10%, the stock’s consensus target price stands at $1,664.49.