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Morgan Stanley upgrade takes Amazon closer to 1 trillion dollar mark

By Angela Gonzalez-Rodriguez

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Management |ANALYSIS

New York - Analysts at Morgan Stanley have raised their Amazon Inc. price target to the highest on Wall Street, forecasting that the e-commerce giant reached new valuation records of 1.2 trillion dollars. If that happened, Amazon will be the second company achieving such a record, second only to Apple Inc.

In a note to market issued on August, 29 Morgan Stanley reiterated its ‘overweight’ rating on Amazon stock and increased its price target for Amazon shares from1,850 dollars to 2,500 dollars apiece.

"We have increasing confidence that Amazon's rapidly growing, increasingly large, high margin revenue streams (advertising, AWS, subscriptions) will drive higher profitability and continued upward estimate revisions," analyst Brian Nowak said in a note to clients Wednesday.

Amazon on track to become 2nd highest valued company worldwise

Explaining their update, Nowak noted that Amazon outperformed the top end of its operating profit guidance by an average of 60 percent during the past three quarterly reports. He predicts the company's high-profit margin businesses such as Amazon Web Services cloud computing, subscriptions and advertising will generate nearly 45 billion dollars in profit by 2020 from an estimated 25 billion dollars this year.

It’s noteworthy that this is the highest target out of the 41 analysts who cover Amazon, according to FactSet.

On the back of the news, Amazon shares closed up 3.4 percent Wednesday, adding to the stock’s annual gain: the shares are up 65 percent so far this year through Tuesday, compared against the S&P 500's 8 percent gain, reports the CNBC.

Image:Amazon Fashion, Amazon.com

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