There is no stopping Amazon.com’s revenue growth, Wall Street analysts said on Friday.
The e-commerce giant re-entered the US$1-trillion club after its results crushed expectations, benefiting from investments in faster shipping and a surge in Prime membership.
Nearly half of the 51 brokerages covering Amazon raised their 12-month price targets on the company’s stock, which was up 9 per cent at US$2,036 in early trading.
In a note titled “Not-so-subtle Reminder Amazon is Still King,” Benchmark analysts said Amazon reminded the world of its “size and capacity advantage,” and raised his price target by US$150 to US$2,400.
Net sales jumped 21 per cent to US$87.4-billion, with sales from AWS – the business responsible for selling data storage and computing power in the cloud – growing 34 per cent. Revenue from subscription fees surged 32 per cent as more shoppers signed up for Prime services.
“Amazon is easily less than halfway through transforming retail by exploiting deep fulfilment moats established over many years,” Canaccord Genuity analyst Michael Graham said.
J.P.Morgan analyst Doug Anmuth raised his price target on the stock to US$2,525 from US$2,200, and said Amazon remains one of the brokerage’s top picks in its U.S. focus list.
“Overall, in our view Amazon’s ability to re-accelerate revenue growth at such a large scale is evidence that its [Prime One Day] investments are paying off,” Mr. Anmuth said. “We’re increasingly optimistic Amazon will continue to execute throughout 2020 on both the top and bottom line.”
Amazon has been in and around the US$1-trillion club for a while now, accompanied by the other tech giants like Apple Inc, Alphabet Inc and Microsoft Corp.
Investors and analysts are touting Visa Inc. and Mastercard Inc. as the next companies in line to move in to the elite list.
At a time when Amazon has been trying to improve its delivery timing through in-house initiatives, the company’s fortunes could be intertwined with that of its delivery partner United Parcel Service Inc., which earns more than one-tenth of its revenue through its partnership with the Washington-based company.
MKM Partners analyst Rohit Kulkarni said Amazon’s logistics business could eclipse UPS in as little as five years.