On
cloud nine: Web growth powers Amazon shares
Send a link to a friend
[July 24, 2015]
By Eileen Soreng
(Reuters) - Amazon.com Inc's <AMZN.O>
shares surged 18 percent in premarket trading on Friday, adding more
than $44 billion to the company's market value, after strong growth in
the company's cloud business drove a surprise quarterly profit.
|
The jump in shares - setting up the stock for its best trading day
in five years - takes Amazon's market capitalization to about $270
billion, overtaking Wal-Mart Stores Inc.
Revenue from Amazon's cloud operations - Amazon Web Services (AWS) -
nearly doubled in the second quarter, indicating that the business
was poised to drive sustainable earnings for the online retailer,
Wall Street analysts said.
Operating margins at the unit jumped to 21.4 pct from 7.7 percent.
"Product sales are Amazon's bread, but AWS is its butter," Wedbush
Securities analyst Michael Pachter said in a note, raising his price
target on the stock by 21 percent to $700.
Jefferies raised its price target to $730 - the highest on the stock
- implying a 51 percent increase from Thursday's close of $482.18.
![](http://archives.lincolndailynews.com/2015/Jul/24/images/ads/current/pestcontrol_bch_fleas_061215.png)
The stock was trading at $577 before the bell on Friday.
At least 14 brokerages raised their target price on the stock. The
median target price on the stock is $640.
Of the 43 analysts covering the stock, 34 have "buy" or higher
ratings, according to Thomson Reuters data.
Analysts expect Amazon to continue to invest heavily in new products
and services and international markets, particularly India.
Investors have raised concerns that the company's aggressive
spending may not pay off. But strong growth in AWS and positive
commentary on Amazon Prime delivery service could assuage some
fears.
[to top of second column] |
![](../images/ads/current/demay_inv-lda081412.png)
"The scale of their distribution network is starting to generate
better incremental margins," Barclays analyst Paul Vogel said.
"That, coupled with the continued strong growth in both revenue and
margins at AWS, moves us from cautious to optimistic on the next
year of growth for Amazon."
Amazon, which last reported a profit in the fourth quarter of 2014,
considers AWS its main engine of growth, along with Amazon Prime and
Marketplace, where the company acts as a middleman for third-party
vendors.
Amazon broke out AWS revenue and income for the first time in the
first quarter.
(Additional reporting by Tenzin Pema in Bengaluru; Editing by
Sayantani Ghosh and Saumyadeb Chakrabarty)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
![](http://archives.lincolndailynews.com/2015/Jul/24/images/ads/current/LPL_small%201.gif) |