4 Reasons To Buy Amazon, According To Victor Anthony

Perhaps a little late to the party, Aegis Capital's Victor Anthony initiated coverage of Amazon.com, Inc. AMZN with a Buy rating and price target of $953.

“We expect Amazon investments in Prime, infrastructure, devices, digital content, AI, and newer areas such as groceries, efforts with CPG and in categories such as apparel, to strengthen its competitive moat and allow it to continue to take share from traditional retail,” Anthony said in a note.

Reasons To Buy Shares

The analyst believes that investing in Amazon’s stock at present is based on expectations that:

• The company would continue to “take share of retail sales, Prime will continue to add subscribers, and retail top-line growth will continue in the high-teen to low-20 percent range.”
• AWS would see continued healthy growth, with margins continuing to expand, against a backdrop of increasing competition.
• Overall margins would expand, despite Amazon making aggressive investments in digital content, infrastructure and other areas.
• Amazon's current stock valuation would be able to “withstand potential macro shocks as well as quarterly variations in earnings versus consensus.”

Anthony explained that while the first three expectations were likely to be met over the next two years, the last one would present a buying opportunity, if and when it occurs.

In fact, the analyst believes that the “combination of the core and AWS should allow Amazon to grow its top line at a 22 percent CAGR (Compound Annual Growth Rate) over the next two years.”