Goldman Sachs Sees Attractiveness in This FANG Stock



Goldman Sachs on Amazon

In its top stock picks for the current market environment, Goldman Sachs included Amazon (AMZN). The investment firm expects Amazon’s sales for 2016 to rise 29% and sales for 2017 to rise 23%.

Amazon’s addressable market is much larger than that of any other online retail giant. Amazon tracks the global retail market (XRT), which potentially has a market value of a trillion dollars.

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Amazon’s business model

Amazon’s business model is unique. In its model, customer requirements are identified individually. The company focuses on tracking more and more customers, and the business is mainly driven by AWS (or Amazon Web Services).

Other e-commerce companies such as Alibaba (BABA) also provide online goods. Alibaba acts as a middleman between sellers and buyers, while Amazon sells both new and used goods. Amazon’s business model signifies that it has the potential to capture even more of the global (ACWI) (VEU) retail market. Although Facebook (FB) and Google (GOOGL) have a sizeable addressable market, their markets are small compared to Amazon’s. This signifies that Amazon’s sales growth could accelerate. Bill Miller, billionaire investor and chair and CEO of LMM Capital Management, also believes that Amazon has the potential to capture more of the global retail market. He also expects that Amazon’s share price could double or triple in the next five years.

Other firms’ recommendations for Amazon

Firms such as Morgan Stanley (MS), Credit Suisse (CS), UBS (UBS), and J.P. Morgan (JPM) have a positive stance on Amazon (AMZN). The above chart shows their recommendations and target prices for Amazon.

In the next part of this series, we’ll analyze Goldman Sachs’s stance on Google.


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