Analysts are very bullish on Amazon’s (AMZN) prospects for growth. A poll of 36 analysts at Yahoo shows that the average earnings estimate for the company stands at $1.92 in 2014. That would be an increase of 225 percent over 2013’s $0.59 per share! What’s even more amazing is the fact that analysts believe Amazon could more than double its earnings again and bring in $4.23 per share in 2015. One analyst actually expects the company to have earnings of $9 a share in 2015!
Overall, analysts expect the company to grow at 49 percent per year over the next 5 years. It’s hard to believe that an online book seller has morphed itself into one of the world’s most formidable online retailers, content providers and internet services companies (thanks to its cloud hosting business).
Analysts are bullish on Amazon’s growth for several reasons:
- Rapid growth in the company’s cloud-hosting business.
- A 25 percent price increase for Amazon Prime (from $79 to $99 a year)
- Strong tablet sales (with Amazon capturing 24 percent of recent tablet orders)
- Increasing use of Amazon video streaming
as the company announced plans to make more content free for all users (a brilliant marketing move that should entice users to buy more premium streaming content)(Amazon has since denied reports by the Wall Street Journal that the company would start offering a free, ad-supported streaming network)
Last week, UBS listed Amazon at the top of its list of “oversold tech stocks” (per 24/7 Wall Street). That’s hard to believe when the stock’s already trading at P/E of 578. Thomson First Call lists a price target of $433.45 for the stock. That would be a 31 percent increase over the current share price of $338. Thomson’s highest price target for the stock (per Yahoo) is $500. The lowest? $330.