Amazon.com, Inc. (NASDAQ: AMZN) shares will rally upwards to USD 3,000 per share, making the Company worth nearly USD 1.5 Trillion, according to CNBC, citing Piper Jaffray analysts.
“We believe AMZN shares will reach USD 3,000 by sometime between mid-’21 and mid-’22 or within 24-36 months,” analyst Michael Olson said in a note. “We have a high degree of confidence that AMZN shares can reach this level with no major acquisitions or other significant changes to the business.”
Olson noted that even though he is assuming that Amazon is facing declining growth in some of its key segments, he still believes there is growth potential for the company. Olson mentioned that he finds the retail side of Amazon’s business is cheap using a traditional retail multiple and another that places Amazon within the tech category where projections are calculated using an e-commerce multiple.
“Adjusting for the value of the AWS segment and Advertising (within “Other”), the company’s core retail segment is trading at a level that implies that business is valued below a traditional brick & mortar multiple of sales,” Olson wrote the note.
Piper Jaffray maintains a 12-month price target of USD 2,225 per share and rates the stock as an overweight. If Amazon’s stock price does push to USD 3,000, it would represent a 65% gain.
Piper Jaffray highlights that it expects Amazon’s advertising segment to grow by 26% year-over-year in 2020 compared to average growth of 17%. Meanwhile, the firm projects Amazon Web Services to grow by 31% in 2020.
Olson believes that Amazon can reach the USD 3,000 per share threshold without making any other acquisitions or big business changes. Although, Olson mentions that a potential spinoff of the Company’s Amazon Web Services could help highlight that its other segments aren’t being valued enough, according to MarketWatch.
Amazon shares have gained 22.2% this year, however, year-over-year, the shares have only gained 14.4%.