Every 1% Of E-Commerce Market Could Equal $15 Billion In Revenue For Amazon

Terming Amazon.com, Inc. AMZN as a “stock in the high castle,” Nomura’s Anthony DiClemente said the company had “a dominant leadership position in multiple large and global addressable markets.”

The analyst initiated coverage of Amazon with a Buy rating and a price target of $950.

Position Of Dominance

Amazon dominates the ecommerce space, and is benefiting from the secular shift away from the $24 trillion global retail market to the $2 trillion ecommerce market. DiClemente estimated that every 1 percent of the e-commerce market could represent ~$15 billion in incremental revenue or ~$0.65 in additional EPS for Amazon.

“AMZN is focused on growth of Prime memberships via investment in continuously improving service; aggressive growth in investment in Prime Instant Video (PIV) is a key piece of this strategy,” the analyst wrote.

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Moreover, the company has secured a leadership position in the Cloud industry via its AWS solution, which could result in significant benefits as the market shifts from the ~$145 billion on-premise infrastructure software market to the IaaS/PaaS market, DiClemente noted.

The analyst projected CAGRs for EBITDA, EPS, and FCF of 38 percent, 100 percent and 45 percent, respectively, from between 2015 and 2020.

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