- Morgan Stanley has raised its Amazon price target to $2,500 from $1,850.
- It's now the highest price target on Wall Street, thanks to a new valuation for web services, ads, and third-party sales.
- Follow Amazon's stock price in real-time here.
Morgan Stanley is now Amazon’s biggest bull on Wall Street.
The bank has raised its price target for shares by 35% — to $2,500 from $1,850 — citing huge growth for the e-commerce giant's traditional retail as well as web service units.
"This PT adjustment is a reflection of AMZN's improving business mix (high-margin businesses will make up ~22% of total revenue in '18 by our estimates), as we believe it more accurately presents AMZN's long-term potential earnings power than our previous three-part sum-of-the-parts price target calculation," analyst Brian Nowak said in a note to clients on Wednesday.
Here’s his updated breakdown:
Web Services and advertising are among Amazon’s highest-margin businesses, Nowak estimates, and have made up an increasing proportion of the company’s total revenue. He estimates the units will bring in $43.5 billion in EBITDA by 2020, compared to $26 billion for the rest of the company.
If the stock hits Morgan Stanley’s new price target, Amazon would be worth $1.3 trillion and would become the second US company to reach the $1 trillion market cap milestone, something Apple made headlines for earlier this month by being the first to cross it.
The bank's new $2,500 price target is 17% above the Wall Street average of $2,140, according to a Bloomberg poll.
Shares of Amazon rose about 1.5% in trading Wednesday and were up 67% since the beginning of the year.
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