Evercore’s Ken Sena increases Amazon stock price target from $930 to $1015 on expected 44% CSOI margin
Following the release of its second quarter of fiscal year 2016 (2QFY16) earnings release, Wall Street has been incrementally optimistic over Amazon.com, Inc. (NASDAQ:AMZN) shares. Today, the stock of the US biggest e-commerce force receives two major price target boosts from RBC Capital Markets and Evercore ISI.
Amazon stock increased as much as 1.21% and hit an intra-day high of $779.00. Just half an hour after the opening bell, the stock was 1.10% and 1.17 million shares were traded compared to average daily trading of 2.25 million.
Ken Sena, analyst at Evercore, maintained Buy rating on Amazon stock and increased price target by $85 to $1015. He believes that the company could save as much as 80% per unit through automating various aspects of e-commerce business by using artificial intelligence, Cloud automation, and machine learning.
Given the massive potential savings, the analyst expects that Fulfillment by Amazon drag on profit and loss margin will be lower than previously projected. There changes in retail margin let to increase in the price target. Using a hypothetical automation cost analyst of the profit and loss of the company’s core retail business, the sell-side firm estimates potential cost alleviation of about 6%. The reduction could lead to 44% in consolidated segment operating income (CSOI) margin, placing the company in the range of 17%.
Additionally, RBC’s Mark Mahaney bumped up Amazon’s price target from $840 to $1,000, while maintaining Outperform rating. The price target was increased after conducting the fourth Annual Online Survey on Germany, Japan and the US, as well as “4th Pillar Potential” of Amazon’s Alexa/Echo platform.
While being ranked as the top e-commerce player in Germany and the US, Amazon was the second-best online shopping platform in Japan, behind the local giant Rakuten. Additionally, awareness and ownership of Amazon Alexa has been increasing rapidly.