Stifel Predicts 'Continued Share Gains' For Amazon, Ups Price Target

Just days after a sell-side firm predicted Amazon.com, Inc. AMZN shares will skyrocket to $3,000 by 2020, one Stifel analyst raised the firm's price target to suggest roughly 28-percent upside from current levels.

The Analyst

Analyst Scott Devitt maintained a Buy rating on Amazon and upped the price target from $2,020 to $2,525.

The Thesis

Amazon's leadership in two large and rapidly growing markets — namely e-commerce and cloud as well strong momentum in its AWS and advertising business — has helped elevate its near- to medium-term margin trajectory, Devitt said in a Wednesday note. (See his track record here.) 

As the retail behemoth "leverages its customer data/traffic volume to provide sellers and brands to effectively reach consumers," the analyst said he sees significant growth potential in advertising in the coming years. 

Stifel increased its 2019 and 2020 ad revenue forecast to $15 billion and $20.2 billion, respectively, giving the business a valuation of $111 billion.

With the increased adoption of the AWS business among larger enterprises and the public sector; wallet share gains from existing customers; and ongoing product innovation, the analyst said he sees continued share gains for the cloud business.

Devitt expects 2019 and 2020 revenues of $36.6 billion and $50.1 billion, respectively from the cloud business, giving the business a $501-billion valuation.

Stifel's 2019 and 2020 estimates for the core retail business were hiked to $143.1 billion and $164.6 billion, respectively, giving the business a valuation of $661 billion, the analyst said.

The consolidated sum-of-the-parts analysis " ... supports continued share gains over the next 12 months," Devitt said. 

The Price Action

Amazon shares were advancing 1.63 percent to $2,007.68 at the time of publication Thursday.

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