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How Amazon Gets AWS To $100+ Billion

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How Amazon Gets AWS To $100+ Billion
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SunTrust Robinson Humphrey’s Robert S. Peck pointed out that the AWS cloud platform already accounts for a large portion of the valuation, services and future of Amazon.com, Inc. (NASDAQ: AMZN).

The analyst maintained a Neutral rating on the company, with a price target of $600.

AWS Worth >$100 Billion

“We think Amazon is positioned well in a large and growing market and believe the AWS asset is worth >$100 billion,” Peck stated.

Peck also noted that Amazon was not only a dominant player in the cloud market, but also a pioneer in this space. With current market share of about 42 percent, the company is likely to see significant opportunity going forward.

Related Link: Don't Fear, Amazon AWS Channel Checks Indicate Nothing's Changed

Rapid Revenue Growth

The analyst also mentioned that Amazon has seen “rapid revenue growth” of 70 percent, with a robust operating margin profile of about 25 percent and a TAM of $50 billion by 2019.

With its revenues of $8 billion growing at a rate of 70 percent, combined with robust EBITDA margins of 50-55 percent, Peck believes that AWS could be valued at more than $100 billion, “implying a ~7x revenue multiple and a ~12x EBITDA multiple.”

We think these multiples are reasonable and perhaps conservative given comparison trading multiples.

Image Credit: Public Domain

Latest Ratings for AMZN

DateFirmActionFromTo
Sep 2017Loop CapitalInitiates Coverage OnBuy
Sep 2017DA DavidsonInitiates Coverage OnBuy
Aug 2017SunTrust Robinson HumphreyInitiates Coverage OnBuy

View More Analyst Ratings for AMZN
View the Latest Analyst Ratings

Posted-In: Bob PeckAnalyst Color Long Ideas Price Target Reiteration Top Stories Analyst Ratings Trading Ideas Best of Benzinga

 

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