Amazon is among JPMorgan's best investment ideas for the coming year, and the bank's analysts detailed their bull case in new report distributed Wednesday.
"AMZN is well positioned with the most diversified revenue & profit streams among large-cap Internets," a team of analysts led by Doug Anmuth told clients. "We believe this is a critical differentiator as sector growth moderates due to bigger bases & higher penetration levels."
The analysts broke their bull case down into several parts. Anmuth said the company's fastest-growing revenue streams are its most profitable, referring specifically to Amazon Web Services and advertising. Both represent around 17% of Amazon's total sales, by JPMorgan's estimates, and more than 85% of its operating profit this year.
JPMorgan also pointed to growth opportunities in areas like grocery (with its Whole Foods acquisition), healthcare and pharmaceuticals (with its Pillpack acquisition), and smart-speaker technology.
Amazon shares soared 28% in 2018, outperforming the broader market during what turned out to be a brutal year for most assets. Still, the stock has now fallen about 19% from its all-time high of $2,050.50 in October.
The firm's $2,100 year-end price target implies a rally of nearly 27% from the stock's current levels. Even with that bullish of an outlook, it pales in comparison to Wall Street's most optimistic target — and most are optimistic.
Of analysts surveyed by Bloomberg, D.A. Davidson analyst Tom Forte is the most bullish, with a $2,450 price target. A full 94% of analysts call the stock a "buy," two have "hold" ratings and one says, "sell."
Source: BI
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