UBS Revisits The Amazon Ecosystem, Raises Price Target On Stock To $1,200

UBS analyst Eric Sheridan is eyeing nearly 20 percent in shares of Amazon.com, Inc. AMZN, as he maintained his Buy rating and raised his price target from $1,100 to $1,200.

“In our newly published & rebuilt Amazon financial model, we take a fresh approach at modeling some of the long-tailed opportunities that can drive overall Amazon ecosystem value,” Sheridan wrote Monday. He specifically highlighted four components he believes will drive growth for shares of Amazon.

1. Amazon Prime membership: Continues to drive increased shopping velocity
2. 3P mix: Will improve product selection options
3. Advertising: “Still early days but ramping quickly as Amazon captures market share of product search & present advertisers with a unique blend of identity & intent,” Sheridan wrote.
4. Amazon Web Services: Continues to serve as a leader in the market

Overall, Sheridan remains bullish on Amazon especially after channel checks raised his short/medium-term estimates.

“As a result of that, we feel comfortable recommending Amazon as a Buy despite its strong YTD stock performance," Sheridan concluded. "With many avenues of growth ahead, we think that investors are much more likely to remain focused on topline opportunities vs. the quarterly cadence of profit margins."

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Image credit: By Álvaro Ibáñez from Madrid, Spain (Amazon España por dentro) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons