In a research note, the Wall Street investment bank reiterated its "overweight" rating to Amazon. The best 12-month target price is $ 2,000 a share, corresponding to a total market capitalization of $ 1 trillion.
Morgan Stanley analyst Brian Nowak wrote in an investor note on Sunday: "Amazon's high margin (revenue) shows that the stock is in the best position by category Under the market value will reach 1 trillion US dollars.` Mentioned in the text, if the taxonomy of the total estimated using 1P, 3P, AWS, subscription and advertising, five parts of the forecast Amazon 2022 returns, and then multiplied by the various parts of Weighted parameters to calculate that the stock will reach $ 2,000 or $ 1 trillion per share by the end of 2018. The weighting of each component is based on the growth and profitability of the corresponding business.
Novak shared his method of calculating valuations and his key predictions of every business in Amazon, valuing the core Amazon retail business at 600 billion U.S. dollars and predicting annual sales growth of its e-commerce businesses by 2022 Rate of 13%, operating profit margin of 5.5% .In addition, Amazon's third-party market business will be 5 years to achieve 25% of interest-earning, depreciation and amortization profits .Novac provided Amazon Web Services $ 270 billion Value, the department expects annual sales growth of 18% and EBITDA of 50% in 2022. He also gives $ 70 billion and $ 50 billion to the growing subscription and advertising businesses.
Although given an ultimate target price of $ 2,000, Morgan Stanley believes the target price for Amazon at this stage is $ 1,250, up 11% from last Friday's close. As of last Friday, Amazon stock rose 50% this year %, The total market value of nearly 550 billion US dollars, over the same period the S & P 500 index rose 15%.