Goldman Sachs on Amazon: New Initiatives Could Drive Growth
Goldman Sachs on Amazon
Goldman Sachs (GS) has placed bets on various e-commerce stocks that it believes will perform well in the next three years. The firm included stocks such as Amazon (AMZN), PayPal (PYPL), Alibaba (BABA), JD.com (JD), and Yandex (YNDX) in its stock picks. The firm provided “buy” ratings to these stocks.
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Goldman Sachs wrote, “While concerns around AWS pricing/growth and ongoing margin pressures are likely to persist, we believe – given its track record of delivering consistently high returns on invested capital – the ongoing investment in fulfillment and infrastructure will widen Amazon’s competitive lead through initiatives such as Fresh, AWS, digital media, and faster fulfillment and product availability, driving incremental growth and, ultimately, profitability.”
Amazon’s new initiatives are the company’s major backbones and will likely drive its growth. Higher growth and earnings will provide a higher return on invested capital. Currently, the company is focusing on various infrastructure developments, expanding its capacity, and becoming a leader in the online retail segment. Goldman Sachs has a current price target of $1,275 for this stock.
Amazon returned nearly 29.5% on a year-to-date basis as of September 7, 2017. The broader market S&P 500 Index (SPY) returned nearly 9.7% during the same period. Over a five-year period, Amazon returned nearly 320%. On September 9, 2017, the stock was trading at $976.65. Its 52-week high is $1,083.31 and its 52-week low is $710.10. The stock is trading 1.2% below its 50-day moving average and on par with its 100-day moving average.
In the next part of this series, we’ll analyze Goldman Sachs’s view on PayPal.