Top Analyst Says Amazon (AMZN) Just Getting Started in Massive Growth Opportunities

Colin Sebastian at Baird, one of the best performing analysts out on Wall Street is going up to bullish bat for Amazon.com, Inc. (NASDAQ:AMZN).

Amazon Prime Is The Powerhouse Fuel Behind the Retail Flywheel 

After reviewing the upshot of a quarterly survey taking a closer glimpse into Amazon selection, Sebastian it out with a bullish vote on this online auction and e-commerce king, spotlighting Prime-eligible selection as a key to the company’s big gains down the line. Thanks to over 100 million items that were not Prime-eligible before now, Sebastian praises an even more valuable Prime membership that ups the company’s tech playing game.

In reaction, the analyst reiterates an Outperform rating on AMZN stock with a price target of $1,100, which represents a just under 11% increase from where the stock is currently trading.

Sebastian recognizes once again a “step-up” in merchandise eligible for Prime shipping, underscoring a 25% quarter-over-quarter rise “even as Amazon appears to manage inventory more closely in FCs.” Moreover, the analyst points out strong Private Label categories that offer further benefit to Amazon, from Sporting Goods to CSA to Baby. “Importantly, expanded Prime-eligible selection improves the value of Prime membership, and as such, reinforces our positive view of Amazon Retail’s long-term growth trajectory,” asserts the analyst.

Amazon’s long-term looks both sustainable and compelling to Sebastian, who cheers: “Prime-eligible and FBA adoption both continue long-term growth trends […] We remain encouraged by ongoing expansion of both Prime and FBA SKUs, particularly as Amazon aims to further leverage its fulfillment capabilities and potentially drive higher levels of Prime subscriptions.”

Meanwhile, though there was a bit of a third-quarter dip in domestic penetration levels, Sebastian’s Prime survey offers a reassuring glimpse into “largely improving US penetration levels.” Considering the analyst projects roughly 125 million households on the domestic front with Prime membership circling 60 million, Prime continues to be the “biggest driver of Amazon’s retail flywheel,” with membership across the globe looking at anywhere between 70 to 75 million households.

Ultimately, any short-term stumbles will dissolve with the momentum of the upcoming holidays bleeding through an exciting next year for the company, as the analyst contends: “While we expected large-cap Internet to take a breather post-Q2, we expect near-term margin concerns to give way to a more optimistic view of AMZN growth for the upcoming Holiday season and 2018. The company remains in the early stages of massive growth opportunities in Retail (<5% share), Technology (<5% share), Media/Entertainment and Shipping/Logistics.”

Wall Street backs this top analyst’s confidence on the king of e-commerce, with TipRanks analytics showcasing AMZN as a Strong Buy. Out of 34 analysts polled by TipRanks in the last 3 months, 32 are bullish on Amazon stock while 2 remain sidelined. With a return potential of nearly 20%, the stock’s consensus target price stands at $1,185.90.