Amazon stock has jumped 64% this year.
Photograph by Jason Alden/Bloomberg
The growth opportunities at Amazon Web Services could exceed the upside potential of Amazon.com’s flagship e-commerce business, HSBC Global Research says.
Analyst Christopher Johnen started coverage
Amazon
stock (ticker: AMZN) on Thursday, with a Buy rating. His price target of $160 implies a 15% increase from the stock’s closing price on Wednesday.
Shares of Amazon rose 0.8% Thursday to $138.07. The stock has jumped 64% this year.
Much of the analyst’s confidence in the stock stems from the tech company’s cloud service, AWS, which he calls Amazon’s “crown jewel.” His bullish call on the cloud service comes as investors are looking for AWS growth to reaccelerate.
On the company’s third-quarter earnings call in October, Chief Financial Officer Brian Olsavsky said while customer’s efforts to cut back on costs continue to be a headwind for AWS, Amazon has seen sales growth pick back up.
“When we look at the fundamentals of the business, we believe we are in good position to drive future growth as the rates of cost optimizations slow down,” Olsavsky said.
Johnen wrote Thursday that although much of the concern about Amazon appears to have been driven by slowing growth at AWS, he says the slowdown isn’t permanent, but rather driven by the broader economic environment.
“Investors should have confidence in the long-term growth opportunity that the secular shift into the cloud will bring,” Johnen said.
Write to Angela Palumbo at [email protected]
Read the full article here