Amazon hits new 52-week high as analysts get more bullish
Japanese bank Nomura reinitiated coverage of Amazon (AMZN) with a $950 price target and Buy rating, becoming the latest in a series of Wall Street research firms that have been getting more bullish with their targets for the e-commerce giant. E-COMMERCE: Amazon is benefiting from the shift to e-commerce from brick and mortar stores, wrote Nomura analyst Anthony DiClemente. For every 1% shift in market share towards e-commerce, Amazon's earnings per share can increase 65c, the analyst stated. CLOUD GROWTH: Given its status as the leader of the cloud industry, Amazon will obtain "substantial benefits" from the growth of the infrastructure-as-a service and software-as-a-service sectors, DiClemente believes. Cloud is "steadily gaining" share from on-premise software, DiClemente noted. ESTIMATES: DiClemente expects Amazon's earnings before interest taxes, depreciation and amortization, earnings per share and free cash flow to rise at compound annual growth rates of 38%, 100%, and 45%, respectively, from 2015-2020. WHAT'S NOTABLE: Yesterday, JPMorgan analyst Doug Anmuth increased his price target on Amazon to $1,000 from $925. Amazon is in a different situation than it was three to five years ago because it has enough gross profit to "invest aggressively" and still expand its margins, Anmuth wrote. Moreover, the company's decision to open three times the number of fulfillment centers this year than in 2015 bodes well for the demand it's seeing from consumers and should enable it to more effectively serve consumers during the holiday season, wrote Anmuth. He remains upbeat on the company's cloud business and kept an Overweight rating on the shares. Earlier this week, Cowen analysts led by John Blackledge said the firm's proprietary data suggests Prime annual net additions have accelerated in the U.S., with 49M domestic members estimated to be using the service as of August 2016. Prime's growth has driven market share gains and purchasing data suggests Amazon can accelerate share gains in large non traditional areas, like grocery, said the analysts. The firm raised its price target on Amazon to $960 from $900 and reiterated an Outperform on the shares. PRICE ACTION: In late morning trading, Amazon rose 0.7% to $821.92. The stock earlier hit a new 52-week high of $825.24.