The evening news of September 25, Beijing time, Sina Technologies News, the Wall Street investment bank Jefferies today released a report that by 2020, Amazon shares are expected to rise to $3,000 a share, the market value of nearly $1.5 trillion.
Fury analyst Brent Thill said in his report that Amazon's core retail business has gained momentum again, driven by Prime membership and first-class compliance. Meanwhile, Amazon's AWS cloud service has become the standard for public clouds, and advertising continues to drive profit margins.
Hill said: "we believe that many of the inherent growth opportunities of Amazon are undervalued by the market. For example, cloud services, advertising, and subscription services are growing at about twice the rate of their core retail business, with more profit margins. We conservatively expect these businesses to be $115 billion in total by 2021, accounting for almost 50% of the valuation, although only a quarter of total revenue.
Hill believes Amazon's share price is expected to grow by 55% over the next two years to about $3,000, thanks to the potential for growth in these businesses and the expansion into sectors such as healthcare. That means Amazon's market capitalisation will reach nearly $1 trillion and 500 billion.
To that end, Hill gave Amazon a "buy" rating, raising its target price from $2185 to $2350, a 21.5% premium to Monday's closing price of $1934.36.
Earlier this month, Amazon's share price rose to $2050 and its market capitalization exceeded $1 trillion, making it the second U.S. company with a market capitalization of $1 trillion after Apple.
Over the past year, Amazon's share price has more than doubled. For this reason, analysts have expressed concern about Amazon's overvaluation, but Hill disagrees, saying that Amazon's share price is still undervalued. "Given all the inherent growth opportunities and the potential of new businesses, we believe Amazon's share price is still undervalued," he said. (Li Ming)
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