Amazon.com Inc. shares hit new highs of more than $490 just before the full market opened on Monday morning on the back of reports that lauded the firm’s recent efforts ahead of earnings. Michael Pachter of Wedbush says that there are many reasons to bet on Amazon, and Prime Day was right there beside AWS growth.
Prime Day was full of controversy for Amazon. The firm said that sales volume was above and beyond that of Black Friday 2014, but those perusing the sales said that there was very little worth buying on offer.Michale Pachter says that sales traction on Prime Day was better than expected,
Getting Prime Day right
The social media backlash was lost on investors, however, as they look forward to seeing huge Amazon Web Services growth in the coming report. Among his six reasons for upgrading Amazon stock from Neutral to Outperform Prime came in at fourth and fifth.
Higher sales traction on Prime Day and higher take-up of Prime subs were both given as reasons to bet on Amazon going forward. Mr. Pachter said that Amazon was now an Outperform, up from Neutral, with a price target of $575, up from $435.
John Blackledge of Cowen & Co. added to the strong outlook for the firm in a report also published on Monday morning, July 20. Mr. Blackledge said that he expects Jeff Bezos’ firm to be the biggest retailer in the US by sales in 2017. Cowen boosted stock in the firm to Outperform, from Perform, with a price target of $565, up from $435.
Amazon Web Services means everything
Mr. Blackledge added that “AWS leadership in the fast-growing Public Cloud market should also continue.” That outlook might be more central to the outlook of those betting on the Seattle, Washington, firm over the last number of weeks.
The real winner for Amazon right now is the firm’s cloud segment. AWS has come into its own in the last couple of quarters, and Wall Street is taking notice. Mr. Pachter, in his report for Wedbush, says that one of the reasons for his price target boost was “faster AWS growth than we previously thought at impressive margin.”
He added that there was “momentum in the AWS Marketplace segment” that could add to that margin in the coming months and years.
Amazon looks strong all over if Wall Street is to be believed. The median price target over the next twelve months now sits at $475. Shares hit above $490, and a new all time high, on this morning’s market.
Earnings, which are set to be delivered after the market closes on Wednesday July 23, will need to be strong in order to support the recent surge in Amazon’s market cap. Wall Street is looking for the firm to show sales of $22.37bn in the quarter.
Amazon earnings are very sensitive to decisions made at the top of the firm, so that number is very hard to forecast. There have been whispers that Amazon might be headed toward more profit this year, but stories like that have failed traders in the past.