Amazon Could Be Worth $1.4 Trillion Soon. Why an Analyst Says It Could Happen. -- Barrons.com
DOW JONES & COMPANY, INC. 11:54 AM ET 4/23/2020
Symbol Last Price Change | AMZN | 2398.3825 | +34.8925 (+1.48%) | | MSFT | 173.44 | -0.08 (-0.05%) | | QUOTES AS OF 11:54:25 AM ET 04/23/2020 |
Amazon (AMZN) reports March quarter results next Thursday, and investors are anticipating a blowout.
That's obvious from the behavior of Amazon(AMZN) shares, which have rallied more than 30% year to date, pushing the company's market cap above $1.2 trillion as the stock moved into all-time record territory. The widespread adoption of shelter-in-place policies in the U.S. and other countries in the face of the Covid-19 pandemic have driven up online shopping activity. Amazon(AMZN) announced plans to hire an extra 100,000 workers to meet the surge -- then filled those slots, and said it would hire 75,000 more. According to The New York Times , CEO Jeff Bezos recently returned to day-to-day management of the company for the first time in years.
In a research note Thursday, Goldman Sachs analyst Heath Terry said he thinks Amazon(AMZN) will be "well above consensus" in the March quarter for both revenue and profits -- and he thinks the company will guide second quarter results above consensus, as well.
For the quarter, the Wall Street analyst consensus calls for $72.9 billion in revenue and profits of $6.34 a share. Amazon(AMZN) itself had projected revenue ranging from $69 billion to $73 billion, up between 16% and 22%. For the June quarter, the consensus is $76.6 billion and $5.96 a share.
Terry sees March quarter revenues of $74.1 billion and profits of $6.51 a share; for the June quarter, he's expecting $82.8 billion in revenue and profits of $6.13 a share.
Terry says the growing demand for Amazon's(AMZN) retail, cloud and advertising businesses -- and the company's ability to meet the demand -- will "steepen the curve of its long term growth rate, drive incremental profitability, and further deepen the competitive moat around all of its businesses."
Terry asserts that despite the rally in the stock, "the market continues to underestimate the long term value of the Amazon(AMZN) platform as the leader in both the movement of retail online and compute into the cloud, the realization of which is being accelerated by the current crisis along with consumer and enterprise adoption."
Terry repeats his Buy rating on the stock, and lifts his price target to $2,900, from $2,600. At the top of the range, the company would be worth $1.44 trillion, and surpass the value of Microsoft(MSFT) at $1.33 billion to be the most valued company on Earth.
On Thursday, Amazon(AMZN) was up nearly 2% to $2,404.67. The S&P 500, Dow Jones Industrial Average, and Nasdaq were all up about 1%.
Write to Eric J. Savitz at eric.savitz@barrons.com |
