Amazon Leads Large Tech Stocks After Morgan Stanley Upgrade
Citing expected share gains driven by the Seattle-based company's global fulfillment network, Morgan Stanley now estimates Amazon will reach 23.5 percent global GMV share and $166 billion in sales in 2016. The previous estimates were 20.6 percent and $145 billion, respectively.
Morgan Stanley's upgrade comes as the latest in a string of good news for the popular online shopping portal. On January 2, Amazon announced a record-breaking holiday season with sales from US sellers growing over 40 percent from last season. As a lighthearted, though true illustration of their success, the company noted that enough Santa hats had been sold so as to give Santa a new hat every day for the next 137 years.
Also, on January 4, Amazon announced an agreement to run prior seasons of popular A&E, Bio, History and Lifetime shows on its Prime Instant Video service. The service, which now holds over 33,000 movies and television shows, can be thought of as Amazon's version of Netflix (NASDAQ: NFLX).
Additionally, Amazon is rumored to have a phone in the works. According to CNET, Amazon will release a new mobile phone sometime between April and September of this year. The phone is expected to cost $100 to $200 which, if true, would give it a price advantage over popular but pricey phones from Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG), Samsung (OTC: SSNLF) and others.
Thus far, the online shopping giant has opened 2013 where it left off in 2012. After closing 2012 up over 40 percent, the stock has already climbed over three percent in the first week of 2013.
According to Yahoo Finance, 27 analysts have a “Buy” or “Strong Buy” rating. Ten have a “Hold” rating and just one believes it will “Underperform." In other words, analyst sentiment is overwhelmingly in favor of owning this stock.
Still, the future is far from certain. Despite an overall positive outlook on the company, Morgan Stanley expects significant threats from competitors such as Apple (NASDAQ: AAPL) as media sales move from physical to digital media. Morgan Stanley also cautions Amazon could end up investing more than expected to gain market share abroad.
So, the future success of the online shopping portal will hinge largely on its adaptation to the realities of digital media and how well its overseas investments go. However, with a plethora of analyst confidence and highly positive future expectations, investors will likely favor this stock in their portfolio, as market activity already indicates on Monday.
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