Amazon Prime international growth supports $2,300 target, says Jefferies
Jefferies analyst Brent Thill compared Amazon.com's net sales to various economic indicators and found that North America is closely aligned with unemployment while international is closely aligned with disposable income. North America is more closely aligned with Amazon's own Subscription sales than any economic indicator measured, confirming Prime's importance in driving growth, Thill tells investors in a research note. As such, he sees higher international adoption, where he notes penetration is less than 10%, driving faster segment growth and supporting his $2,300 price target for Amazon shares. The analyst estimates Europe represents ~60% of Amazon's international sales. Thus, a sluggish macro environment in the region could be holding back the company's segment growth, says Thill. He believes Prime would be worth $70B-$120B as a separate entity, representing ~10% of Amazon's current market capitalization. Thill keeps a Buy rating on the name.