Amazon Could Hit $3,200 in Bull Case: RBC

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By Yasin Ebrahim – Amazon (NASDAQ:) has weathered the selling storm Friday, underpinned by its blowout quarterly results. But the e-commerce giant’s rally is far from over, with one analyst laying out a bull case for the stock to rally nearly 60% over the next two years.

RBC Capital’s raised its price target on shares of Amazon to $3,200 from $2,700 and estimated that the stock could rally to $3,200 on a favorable backdrop.

In an upside scenario, Amazon shares could be worth $3,200 as heightened growth could spur support higher multiples for the e-commerce giant, RBC said.

The investment bank said highlighted various segments that would likely drive higher-than-expected revenue growth rates over the next two years, including “international growth, Alexa device adoption, Amazon Web Services and advertising revenue growth.”

“Operating margins could expand in 2019 due to increased revenue growth coupled with improving efficiencies,” it added.

The bullish outlook comes a day after the e-commerce giant delivered blowout quarterly results, with a beat on both the top and bottom lines.

Growth was led by strong performance in its North American retail business as the rollout of its one-day shipping program bolstered sales.

Its cloud business, AWS, also impressed with better-than-expected as revenue of $9.95 billion for the quarter, topped estimates of $9.84 billion.

The beat in cloud services in the face of rising competition should ease investor concerns about the slowing growth in the e-commerce giant’s high-margin business.

AWS’ performance for the quarter should allay fears as it suffered “only 100 basis points of deceleration (but added) more dollar-adds year-on-year” than Microsoft (NASDAQ:) Azure and Google (NASDAQ:) Cloud combined, Barclays said.

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