Amazon Inc (NASDAQ:AMZN) yesterday reached a valuation of over US$500bn, thanks to the general rise in equities, putting it into a small and elite club - think the likes of Alphabet (NYSE:GOOG) and Apple Inc (NYSE:AAPL).
It also means founder Jeff Bezos, who owns around a fifth of the group, is reportedly the new richest man on the planet, eclipsing Microsoft co-founder Bill Gates.
Today, after the close, the online retail titan delivers second quarter results and the figures will probably underline the group is well on its way to becoming one of the world’s largest retailers.
Broker Wedbush has repeated an 'outperform' stance on the shares, and targets US$1,250 for the stock - a long chalk from the current US$1,078..
"Amazon has proven that it can generate high contribution margin as its revenue grows unabated. Our US$1,250 price target assumes that Amazon will continue to control spending, yielding continued earnings growth," says Wedbush's Michael Pachter.
Spending on new initiatives (Kindle, Fire TV, Echo hardware) tempers earnings in the short term, suggests Pachter, but the longer view is rosy.
"... the expansion of Amazon Web Services has thus far been quite costly, although it is clear that AWS is generating significant leverage and will continue to do so," he adds.
Whole Foods acquisition ...
"The acquisition of Whole Foods positions Amazon to dramatically expand the reach of its Amazon Fresh grocery delivery service, adding over US$600 billion to its total addressable market."
Pachter added he also expects Amazon to begin to accept PayPal as a payment processor in the near future, which should 'significantly' improve Amazon's reach.
Wedbush expects second quarter revenue to come in at US$37.58bn compared to the consensus of US$37.18bn and guidance of between US$35.25bn and US$37.75bn, reflecting ongoing positive momentum for third-party seller services, subscriptions, and AWS, all of which are strong indicators of Amazon’s long-term growth potential.
It has operating income at US$1.15bn, versus consensus of US$1.07bn and guidance of between US$425mln and US$1,075mln and EPS (earnings per share) of US$1.42, which is in-line with consensus.
"We do not expect Amazon to provide any meaningful color around the timing or synergies from the Whole Foods Market acquisition, which is currently expected to close in the second half of 2017," the broker added.
Macquarie also upbeat ...
On Monday this week, broker Macquarie was also bullish and repeated an 'outperform' rating and rose the price target.
"Amazon will be the most valuable company on the planet one day," analyst Benjamin Schachter wrote in a note.
"We see few competitive threats to its core retail/marketplace business, and while AWS [Amazon Web Services] is seeing increased competition from MSFT and GOOG (among others), we think its lead there is well established."