2 of Amazon's businesses are going to boost its stock by another 25%, analyst says
- Amazon shares will climb another 25% to $2,525 - the highest target on Wall Street - according to Stifel.
- Amazon will grab more market share in retail spending as consumers shift online and the e-commerce giant expands further into brick-and-mortar, analyst Scott Devitt said.
- Amazon's cloud business will grow more than two times faster than the overall market, according to Devitt.
- Watch Amazon share in real time here.
Amazon's dominance in two main areas, e-commerce and the cloud, will gives its stock another 25% boost, Stifel says.
"Amazon is the leader in two large and rapidly growing markets (eCommerce and Cloud)," analyst Scott Devitt said in a note sent out to clients on Thursday. He added that Amazon's momentum in the two businesses will drive its stock price to a Street-high target of $2,525. Devitt's previous targe was at $2,020.
The e-commerce giant posted a $63.5 billion product sales in the first half of this year, up 31% from the same period last year. And the product sales could grow even faster in the following quarters as the Thanksgiving and Christmas holidays near, Devitt noted.
Devitt added that store closures in the US are continuing at a rapid pace, but consumer sentiment and employment rates are near an 18-year peak, which should benefit its e-commerce business. Meanwhile, Amazon is investing in a number of initiatives, including Prime and further capturing offline retail opportunities, such as acquiring Whole Foods and updating its Amazon Go features. All show that Amazon will grab more market share in the retail space, according to Devitt.
"We support where Amazon's investment dollars are focused as we believe this better positions the company for continued market share gains and opportunity for greater margin expansion once the company emerges from the current investment cycle," Devitt said.
Amazon posted $11.6 billion of revenue from cloud business for the six month ended in June, up 49% from last year. By Devitt's calculation, global public cloud spending is expected to grow 18% in the next three years, and Amazon's cloud business will grow 42% in the same period - more than two times faster than the overall market.
"We expect continued market share gains from Amazon's cloud business driven by increased adoption among larger enterprises and the public sector, wallet share gains from existing customers, and ongoing product innovation," Devitt said.
On Thursday, Amazon opened a new concept store called Amazon 4-Star, in Manhattan's SoHo neighborhood. The store only sells items that customers have rated four stars and above, as well as products that the website's data shows are trending and on customers' wish lists.
Amazon shares gained almost 2% on Thursday. They're up 70% this year.
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