Bob Peck Sees Amazon's AWS Worth $100+ Billion, Reiterates At Neutral

SunTrust Robinson Humphrey’s Robert S. Peck pointed out that the AWS cloud platform already accounts for a large portion of the valuation, services and future of Amazon.com, Inc. AMZN.

The analyst maintained a Neutral rating on the company, with a price target of $600.

AWS Worth >$100 Billion

“We think Amazon is positioned well in a large and growing market and believe the AWS asset is worth >$100 billion,” Peck stated.

Peck also noted that Amazon was not only a dominant player in the cloud market, but also a pioneer in this space. With current market share of about 42 percent, the company is likely to see significant opportunity going forward.

Related Link: Don't Fear, Amazon AWS Channel Checks Indicate Nothing's Changed

Rapid Revenue Growth

The analyst also mentioned that Amazon has seen “rapid revenue growth” of 70 percent, with a robust operating margin profile of about 25 percent and a TAM of $50 billion by 2019.

With its revenues of $8 billion growing at a rate of 70 percent, combined with robust EBITDA margins of 50-55 percent, Peck believes that AWS could be valued at more than $100 billion, “implying a ~7x revenue multiple and a ~12x EBITDA multiple.”

We think these multiples are reasonable and perhaps conservative given comparison trading multiples.