The Case For Amazon $2K

For many investors, the case for Amazon.com, Inc.AMZN's stock appreciating to $2,000 per share seems like a far-fetched targer, but a major Wall Street firm sees the valuation as a real possibility.

The Analyst

Morgan Stanley's Brian Nowak maintains an Overweight rating on Amazon with a $1,250 price target. 

The Thesis

Nowak laid out the argument for Amazon's stock to be worth around $2,000 per share or roughly $1 trillion last year, and his core  thesis is essentially unchanged. (See the analyst's track record here.) 

The analyst presented the math behind a $2,000-per-share upside for Amazon in November as follows:

• Core retail business: $600 billion or $815 per share.
• AWS: $270 billion or $555 per share.
• Subscription: $69 billion or $141 per share.
• Other/Advertising: $55 billion or $112 per share.

The analyst revised his sum-of-the-parts valuation in a Friday note: 

• Core retail business: $402 billion or $815 per share (3P business) plus $191 billion or $388 per share (1P business).
• AWS: $273 billion or $555 per share.
• Subscription: $69 billion or $141 per share.
• Advertising/Other: $55 billion or $112 per share.

Price Action

Shares of Amazon hit a new all-time high of $1,305.45 on Friday and were last seen trading higher by more than 2 percent on the day.

Related Links

The Road To $1 Trillion: Amazon Can Beat Apple

Analysis: Amazon's Potential Still Largely Untapped

Photo courtesy of Amazon.