Amazon’s share price is expected to grow exponentially in the next 12 months to a high of $1,600 according to analysts on Wall Street.
Most analysts present a growth picture for the online retail giant. BMO Capital Markets projects the highest forecast of $1,600 among its peers. According to BMO analyst Daniel Salmon, Amazon’s advertising business will be the growth catalyst in the next 12 months if the company becomes more open with data as it has done with Amazon Web Services.
From last week’s close of $1,305.20, Amazon ranks fourth in the S&P 500 behind Apple, Alphabet and Microsoft on the basis of market capitalization. BMO’s price target means a market capitalization of $771 billion for Amazon.
If indeed the advertising business opens up growth on multiple fronts for the company it will be a culmination of more than 20 years of continuous expansion for the e-commerce giant whose shares traded at $272 five years ago. The growth has been steady over the years with the tempo increasing in recent years.
The analyst’s new price target implies a market cap of $771 billion given the current level of common stock. Shares rose about 2 percent on Tuesday.
Amazon’s ascent in the retail world has been nearly 21 years in the making, but the e-commerce giant has been accruing market cap at a faster rate in recent years.
Five years ago, shares of Amazon traded at $272, climbing to $809 per share by January 2016. With its shares now trading around $1,325, the company is ranked fourth in the S&P 500 in terms of market cap, behind Apple, Alphabet and Microsoft.
Salmon noted that the company’s sponsored product ads, headline search ads and product display ads present the company with an $18 billion revenue opportunity in the medium term. Amazon may also see a bump in revenue when it starts recording certain advertising fees as revenue, the analyst added.
Amazon has been dabbling in various advertising products across its portfolio in recent months, preparing for a larger move into the space this year. Conversations appeared to be focused on the company’s search and video products, sources told CNBC. One source said Amazon is working with third-party mobile advertising firms like Kargo.
Ken Sena of Wells Fargo is now the second most bullish analyst on Wall Street on the stock with a $1,525 12-month target, according to FactSet. Three others have $1,500 price targets.
While the company’s stock rose 60 percent in the past 12 months, nearly 12 percent of that gain has occurred in the new year alone. But despite the dramatic rise, Wall Street has remained largely positive on shares. Echoing Salmon’s sentiment, Piper Jaffray analyst Michael Olson reiterated his buy rating last week.
“Amazon, despite its size and continued strong growth, is arguably still in the early innings of its share gain potential, even in the company’s most penetrated market,” Olson wrote on Jan. 9.
Olson increased his price target for Amazon shares to $1,400 from $1,200 last week.