Retail “disrupter” Amazon is on fire, and its stock could jump 19% next year after more than doubling during 2015, according to analysts at Pacific Crest, which started covering the company’s stock this week.
“Amazon continues to innovate at a high rate, and we believe it is embedding itself into the shopping habits of consumers globally,” the analysts said in a Pacific Crest report obtained by MarketWatch. The analysts highlight apparel, grocery sales, and Amazon’s cloud computing business as “three large medium-term opportunities” that could help the company achieve sustained 15% growth in revenue and free cash flow.
The e-commerce giant is “one of the most disruptive forces in retail and technology today,” and it “continues to expand its competitive gap with other retailers,” the analysts added.
The analysts gave Amazon stock an overweight (or buy) rating, as well as a 12-month price target of $800. That implies a rise of 19% in the next year, as the stock has lately traded around $670, MarketWatch said.
Amazon stock was up 116% in 2015 as of Monday’s market close. It’s the S&P 500’s second-best performer in the year to date, topped only by Netflix.
The Pacific Crest analysts also started coverage of Liberty Interactive, whose brands include the TV shopping network QVC, Evite, Backcountry.com, and Bodybuilding.com, with an overweight rating. Their 12-month price target for the stock is $31, implying a rise of 14% from where it finished last week.
“We think QVC is one of the unsung and underappreciated e-commerce players,” the analysts wrote. They add that the acquisition of shopping site Zulily “should help lift growth over the next few years.”
The Pacific Crest analysts were bullish on Internet retail in general, according to a sector report.
“With e-commerce penetration at a mere 7% of U.S. retail sales, the channel has significant room to expand,” the analysts wrote. “We believe that e-commerce can be at least 30% of total retail sales in the next five years.”
Pacific Crest was less bullish on several other e-Commerce stocks, placing sector weight (or neutral) ratings on diamond seller Blue Nile and home furnishings retailer Wayfair.