Amazon is Best Long-Term Growth Story: MKM

Shares of Seattle-based e-commerce and cloud computing giant Amazon.com Inc. (AMZN) are set to continue their rally in 2018, already up nearly 38% year-to-date (YTD) and sharply outperforming the S&P 500's 0.5% return in the first four months of the year, according to one team of bulls on the Street. (See also: Why Did Amazon Hike Prime Subscription Fee?)

In a note to clients on Tuesday, MKM analyst Rob Sanderson lifted his 12-month price target on AMZN stock to $1,840 from $1,750, forecasting shares to gain another 14% as the online shopping giant increases its hold of the U.S. retail market by 2025. Trading up about 0.2% on Tuesday at $1,612.69, AMZN reflects a total market value of over $777 billion, and has returned 61.9% to shareholders in the most recent 12 months. 

Sanderson made the bold call for AMZN stock to appreciate 2.5 to 3 times over the next five to six years. He views the tech behemoth as the "best long-term growth story" among its mega-cap peers such as Alphabet Inc. (GOOGL), Apple Inc. (AAPL) and Facebook Inc. (FB), set to outperform as its platform continues to secure its position as "the storefront and logistics infrastructure for a meaningful portion of the retail industry."

Management Competency Cited

“The brand, logistics infrastructure, secular trend and management competency will continue to drive meaningful share gain,” wrote the MKM analyst, noting that Amazon's $300 billion-plus surge in market capitalization since its quarterly earnings beat in October nearly dwarfs the market value of Walmart Inc. (WMT) and Salesforce.com Inc. (CRM) combined. This gain has been warranted, argued Sanderson, as Jeff Bezos' "everything store" could grab 14.5% of all U.S. retail sales, compared to just 5.2% last year. 

The analyst suggested that Amazon is in its early stages of growth in its primary end markets, such as retail consumption and computing infrastructure, particularly when contrasted to "penetration of verticals for its mega-cap peers" in segments such as advertising, media and travel. (See also: Amazon to Be #1 in Apparel in 2018: Morgan Stanley.)