A sum-of-the-parts breakdown by Jefferies forecasts upside of approximately 65 per cent as profitable segments — such as Amazon Web Services, Advertising, and 3P Seller Services — are all growing at rates faster than the core retail division.
“Multiples for these high-recurring revenue, high-margin businesses to expand as investors recognise their embedded value,” Thill said in a research note to clients.
Thill also mentions the forecast does not include any upside from new businesses like health care, “which could prove a break-out hit” with Amazon expected to play a meaningful hand in medical prescriptions and over-the-counter drugs.
Amazon shares have climbed about 35 per cent since a bottom in late December, but Jefferies still believes the stock has held back since last earnings given “investor concerns about decelerating top line growth and step up in investments.”
The firm reiterated its buy rating and 12-month share price target of $US2,300.