- Amazon.com, Inc. (NASDAQ: AMZN) recently received a bullish price target by Pivotal Research senior analyst Michael Levine at $4,500
Amazon.com, Inc. (NASDAQ: AMZN) recently received a bullish price target by Pivotal Research senior analyst Michael Levine. Levine has assigned Amazon a $4,500 price target, which is a 15% increase from its previous $3,900 price target. And that is a 45% price bump from the $3,125 price close on Friday, October 2, 2020.
So why did Levine bump up the price target? Levine said that the market has been underestimated the potential of Amazon’s advertising operations. Even though ads make up just 5% of Amazon’s ad revenues, Levine noted that there will be a massive upside by 2024 as analyst have been looking at the “sum of the parts” (SOTP) wrong.
Advertising for Amazon has been a “far greater contributor to overall non-AWS EBIT margins than the street recognizes. Said differently, If advertising was viewed as a stand-alone business unit… it would represent well north of 300% of 2020E non-AWS EBIT.”
This year, Amazon generated about $8 billion in net ad revenue. And eMarketer is forecasting that this figure will increase to $13 billion for the full year compared to $10 billion a year ago. Currently, Amazon is the third-largest ad platform company after Google and Facebook.
Additional Price Target Increases
Pivotal Research is not the only one that increased its Amazon price targets this month.
Cowen analysts reiterated its Outperform rating and assigned a $4,000 price target on Amazon. And Cowen noted that Prime Day has been one of the strong sales days of the year for the company as it typically drives high sales and Prime member growth that surpasses Black Friday every year.
Jefferies analysts are also bullish on Amazon. The buy rating was reiterated with a price target of $3,800 at Jefferies.
And Societe Generale upgraded its rating from positive to buy with a price target increase from $2,730 to $3,660. This is a 34% increase from their previous price target.
Disclosure: I have a small AMZN position in my portfolio