Shocking Call on Amazon Stock
An analyst at Sandford Bernstein Co. raised his target price on Amazon.com, Inc. (NASDAQ:AMZN), calling current consensus estimates from Wall Street on Amazon stock “shockingly low.”
Carlos Kirjner raised his price target on Amazon stock to $1,000, citing strong financial results, expanding gross margins, and a long growth runway. The news sent shares of AMZN stock soaring to fresh all-time highs. As of midday on Tuesday, shares were trading up nearly three percent to $697.70. (Source: “An Analyst Has Put a $1,000 Price Target on Amazon Shares,” Bloomberg, May 10, 2016.)
“[W]e are bullish in the short, medium, and long term and think we may see margins expand much faster than they have in the next two years than they have in the last two… We think consensus estimates are shockingly low in the next two to three quarters and even lower four to six quarters out,” stated Kirjner. (Source: Ibid.)
Amazon’s retail business shows little sign of slowing down. The company continues to benefit from “Prime” and favorable foreign exchange rates continue to boost profits. Given most of Amazon’s costs are fixed, growing sales will likely flow directly to the bottom line.
Meanwhile, the company is finding new businesses to conquer. On Tuesday, Amazon launched “Video Direct,” which could become a direct competitor to Alphabet’s YouTube. Content creators are able to upload videos and will receive a cut of any ad revenues.
“We think Amazon’s businesses are now so large, fast-growing, and profitable that it is harder and harder for the company to find new areas of investment to keep up with the growth in gross profits,” Kirjner wrote. “[T]ime is on the side of margin expansion.” (Source: Ibid.)
Kirjner’s price target is now the highest on the Street, but he’s not the only one backing up the truck on Amazon stock.
JPMorgan Chase’s Douglas Anmuth is also optimistic, seeing AMZN stock hitting $915.00 per share over the next 12 months. And last week, venture capitalist Chamath Palihapitiya told those attending the Sohn Investment Conference that Amazon will be a $3.0-trillion company within 10 years. (Source: Ibid.)