Amazon.com Inc. surpassed Wal-Mart Stores Inc. as the world\’s biggest retailer by market value after a surprise second-quarter profit sent the e-commerce company\’s stock into record territory.
Amazon shares rose as much as 19 per cent to $573.45 in after-market trading on Thursday, giving the Seattle-based company a value of about $267 billion. That compares with Wal-Mart\’s $233.5 billion market valuation. Amazon was trading up 15% at US$557.39 by mid-morning Friday.
Wal-Mart still dwarfs Amazon in terms of sales, about five times its annual revenue. But Amazon has solidified its dominance in e-commerce, forcing its big-box rival to play catch-up.
Wal-Mart is investing heavily in the Web operations and developing its own online subscription plan to compete with Amazon Prime.
Amazon.com Inc shares soar on surprise profit, higher-than-expected salesHow Amazon.com Inc is disrupting the clothing marketWal-Mart Inc has plans to counterattack Amazon\’s \’Prime Day\’ with its own massive online sale
Here’s the epic chart from Business Insider:
Amazon\’s market value has been steadily gaining on Wal-Mart\’s this season. Amazon was already up 55 percent in 2015 through Thursday\’s close, while Wal-Mart has lost 16 per cent of its value.
Amazon posted revenue of $23.2 billion last quarter, a 20 percent gain. That topped analysts\’ average projection of $22.4 billion. Net gain was $92 million, or 19 cents a share, the organization said. Analysts had estimated a loss of 14 cents.
Wall Street has upped its targets for the company. By last week Friday, analysts surveyed by Bloomberg had a typical price target of $480 with 32 analysts rating the firm a buy, 16 hold and 1 sell. By early this morning in New York, the price target has risen to $560 there are 37 buy ratings, 10 holds and 1 sell. Amazon closed yesterday at $482.18.
Here is a more in depth roundup of what a number of the analysts covering the stock are saying.
Cowen and Company\’s?John Blackledge (raised price target to $700 from $565)
AMZN reported a break-out qtr with revs beating the high- end of guidance and 2% above our est. driven by accelerating EGM and AWS topline growth, while margins shined with GM\’s 90bps and adj. op inc. 200bps above forecast. 3Q15 revenue and adj. op. inc. crushed our and street pre-print estimates. Raising \’15-\’20 forecast, Price Target to $700 from $565, Reiterate Outperform.
Bank of the usa Merrill Lynch\’s Justin Post (increased price target to $620 from $535)
Maintain Buy, Top 2H Idea.?Results reinforce our 2H thesis, using the hardest part post call pegging the right valuation range for the stock. We continue to expect: 1) Prime traction to drive strong N. America?EGM rev. into the holidays; 2) AWS ?Amazon Web Services…cloud computing? revenue strength they are driving potentially higher multiples;?3) potential margin upside from AWS, 3P mix and fulfillment efficiency. Given acceleration of EGM and AWS, we expect street valuation multiples to go higher for both businesses.
CLSA\’s James Lee (raised price target to?$650 from $500)
Amazon crushed profit expectations because of AWS?and Marketplaces. Consistent?with last quarter, operating income guidance for 3Q15 indicated a powerful top line?and margin expansion for AWS in addition to positive expectations for Prime Day.?Digital investments are still a concern, but were offset by AWS profitability. We?raise our target to $650 from $500 and keep O-PF as we are raising our?Ebitda forecast by 26% due to AWS and third-party services. We still see room?for more upside from cross-border trades (CBT) into China and opportunities for?the advertising business for small/medium businesses (SMBs).
Wells Fargo\’s?Matt Nemer (price target range raised to $533.00-$559.00 from $495.00-$520.00)
We think Amazon is well positioned for share gains using the best customer?experience in retail (lowest prices, best selection, best service) and substantial?structural cost advantages.
Credit Suisse\’s Stephen Ju (price target raised to $700 from $480)
..we feel AMZN will continue to reap margin advantages of fulfillment center maturation and shipping fee savings from the expanded footprint we reiterate that while investor focus continues to center on AWS reacceleration and strength in EGM, we\’d instead refocus on Amazon\’s expanding core retail gross profit on the ongoing benefits of FC maturation and development of Prime membership.
Goldman Sachs\’ Heath Terry (price target to $650 from $570)
We believe this quarter is further evidence that Amazon\’s purchase of infrastructure,?logistics, and web services is accelerating market share gains, cash flow growth, and?continued high returns on invested capital. Therefore, we remain Buy- rated.
Wedbush\’s?Michael Pachter (price target to $700 from $575)
Unexpected profits well above the high end of guidance and consensus?clearly reflect the tremendous leverage in Amazon\’s model.
Barclays\’?Paul Vogel (upgrades to overweight price target to $700 from $412)
Upgrade to OW: We normally shy away from ratings changes on quarters once we tend to?wait for a stock to stay after a big move after which re-evaluate. This quarter was too?good in our view to wait and, despite the sizable move in the stock already this season?(and aftermarket), we now believe there is even more upside.