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Why Is The Street So Optimistic About Amazon?

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Why Is The Street So Optimistic About Amazon?

Amazon.com, Inc. (NASDAQ: AMZN) stock is up almost 40 percent year-to-date and the Street is getting even more optimistic about the company.

R.J. Hottovy, Morningstar analyst, was on CNBC Friday to explain the reason for this optimism.

Getting Back To Basics

“The company has gotten back to its core business lines more than anything else – e-commerce and AWS (Amazon Web Services),” Hottovy said. “We haven’t heard much about the Fire phone that was a disaster last year, really focused on what makes things want to go to this business.

"In particular, I think they have done a great job making the Prime membership more attractive for not only customers, but also sellers, keeping the marketplace vibrant.”

Related Link: Amazon "Overwhelming Leader" In Cloud Infrastructure

He continued, “We also got our first glimpse of what AWS, the cloud computing and software services of the business, looks like – very profitable business that’s got some very intriguing long-term valuation and implications as well. So, I think that’s what the company is doing right, just getting back to basics.”

Fairly Valued

Hottovy was asked if he will be a "buy" on Amazon at this point. He replied, “We think the shares are effectively fairly valued right now. We have a $440 fair value estimate. I think, the best business has a ton of momentum behind it at this point, but the thing to remember is the second and third quarter – typically when you see the heaviest investments in the business ahead of the holiday season.

“So, sometimes as we look to the next couple of quarters, you start to see some of those margin concerns start to creep back in the marketplace. Right now – fairly valued, be a holder of it, probably would not be adding a lot of new money to it at this point,” Hottovy concluded.

Image Credit: Public Domain

Posted-In: Amazon Fire Amazon Web Services CNBC e-commerce morningstar R.J. HottovyAnalyst Color Media Best of Benzinga

 

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