2017-11-15 22:11:23, 回應(0), 人氣(649)Online retailing behemoth Amazon.com Inc.
(Amazon.com Inc 1,136.84+0.68%/per share) is on a path to double its profits by the year 2020, pushing its market capitalization over $1 trillion as soon as one year from now, according to analysts at Morgan Stanley
(MSMorgan Stanley 48.38-0.51%).
These analysts note that non-retail businesses such as cloud computing, the Amazon Prime video subscription service, and advertising already are generating nearly half the company's profits.
In a November 12 research note entitled "Amazon.com Inc: The Math Behind the Trillion Dollar Bull Case," Morgan Stanley explains how Amazon's share price could exceed $2,000 by the end of 2018, up 77% from the open on November 14, and enough to push the company's market cap above $1 trillion, given its current shares outstanding.
On a sum-of-the-parts basis, Morgan Stanley places these values on Amazon's four principal lines of business: core retail, $600 billion; Amazon Web Services (AWS), its cloud-computing division, $270 billion; the Amazon Prime preferred shopper and video subscription service, $70 billion; and the Amazon Media Group (AMG), its advertising business, $55 billion. Those parts add up to $995 billion, and Morgan Stanley notes that their valuation of AWS is a particularly conservative estimate, in their opinion.
Largely based on projections that Amazon can triple its revenues by 2025, representing a significant slowdown from its recent history, research firm MKM Partners expects that its market cap can exceed $1.6 billion by that year, MarketWatch reports. (For more, see also: How Amazon Will Be Worth $1.6 Trillion in Less Than a Decade.)
Looking at gross profits, Morgan Stanley projects that these will grow from about $65 billion in 2017 to $133 billion in 2020. For 2017, the company's core retail business is estimated to contribute $34 billion, with the other $31 billion coming from the other businesses listed above. In 2020, Morgan Stanley expects core retail profits to be $68 billion, with $65 billion from the other businesses.
Core Retail
The core retail business consists of first-party (1P) and third-party (3P) sales. That is, sales made by Amazon directly out of its own inventory and sales made through Amazon's website by independent merchants that pay Amazon a commission. Morgan Stanley values the 1P business at $200 billion and the even more rapidly-growing 3P business at $400 billion.
The valuation of the 1P business is based on the assumption that Amazon will improve its EBIT margin from about 2% today to 5.5% by 2022, a 20% premium to the current 4.6% margin at Wal-Mart Stores Inc. (WMT
). Revenues are projected to be growing at a compound annual rate of 13% in 2020 – 2022, which Morgan Stanley considers to be conservative, even given a current peer group median of 5.5%. They also assume that the market would value this business at 12 times EBITDA, versus a median of 10.5 times for a peer group, justified by Amazon's faster sales growth.Regarding the 3P business, Morgan Stanley projects a 25% EBITDA margin by 2022, in line with the roughly 29% margins enjoyed by competitors such as eBay Inc. (EBAY
), Etsy Inc. (ETSYToday's Virtual Mall
Rose Klimovich, who teaches retail and fashion marketing at Manhattan College in New York City, draws an analogy with the brick-and-mortar shopping malls that are in decline as a result of Amazon's onslaught. She says that Amazon is like the big department stores that serve as anchor tenants in traditional malls, drawing in smaller merchants that hope to increase their own customer traffic through this proximity. Today, Amazon is the premier virtual mall, and those smaller merchants are increasingly compelled to set up shop there.
Cloud Computing
Morgan Stanley projects that AWS, the market leader, can improve its operating margin by about 100 basis points per year, reaching 33% by 2022. They applied an EV/EBITDA valuation multiple of 13 times, versus about 14.5 times for its peer group, reaching a value of $270 billion. They also project that AWS will be growing revenues at an 18% annual rate in 2020 – 2022, versus a current median growth rate of 7% for its peers. (For more, see also: Microsoft Cloud Sales Show It's Catching Up With Amazon.)
Subscription and Advertising
The Amazon Prime subscription business is valued by Morgan Stanley at $70 billion, or EV/sales of 4.5 times, versus 6.0 times for a peer group. They project sales growth at 10% annually in 2020 – 2022, versus a current peer group median of 30%. Meanwhile, they value the AMG advertising business at $55 billion, at an EV/sales multiple of 6.0 times, compared to a peer group median of 5.25 times. They forecast revenue growth at 17% annually in 2020 – 22, compared to a peer group median of 20%.
Read more: Could Amazon's Market Cap Be $1 Trillion Within a Year? | Investopedia